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Fiscal board digs in on its claim of Title III court’s limited jurisdiction


By The Star Staff


The Financial Oversight and Management Board is continuing to press the argument that the Title III bankruptcy court does not have jurisdiction to evaluate whether the debt adjustment plan complies with the fiscal plan.


The Title III court is slated to start confirmation hearings on the debt adjustment plan in November and opponents of the debt deal that would restructure some $35 billion in debt want to present evidence that it does not comply with the fiscal plan.


The oversight board is arguing that it already certified that the debt deal is consistent with the fiscal plan and that certification cannot be challenged.


The oversight board says the arguments made by opponents of the debt deal “fail as a matter of statutory construction because Section 106(e) expressly divests the Court of jurisdiction to review the Oversight Board’s § 104(j) certification that the plan of adjustment [Plan] is consistent with the certified fiscal plan,” the board told the court in a motion in limine.


The oversight board is asking the court to make a ruling on the matter because it will have an impact on discovery.


“The Oversight Board seeks a ruling that certain evidence would be inadmissible because this Court lacks subject-matter jurisdiction to review the Oversight Board’s certification that the Plan is consistent with the fiscal plan,” the oversight board said with regard to claims that it was seeking an advisory opinion. “The motion addresses an actual and imminent controversy arising in the confirmation hearing scheduled to commence in November. Indeed, the objections to the motion prove there is a live controversy with respect to this issue. The fact that the Plan or the fiscal plan may be amended before confirmation does not render the issue advisory.”


“Regardless of what the Plan or the certified fiscal plan states on the confirmation date, the question of whether this Court lacks subject-matter jurisdiction to consider evidence concerning the consistency between the Plan and the fiscal plan — other than evidence of the Oversight Board’s certification — is an issue that must be addressed at confirmation pursuant to PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act] § 314(b)(7),” the board added.


Opponents, however, are arguing that preventing them from presenting evidence that the debt deal does not meet fiscal plan requirements violates their due process rights.


“That premise is false,” the oversight board said. “The Motion in Limine is simply an evidentiary objection that could be made at the confirmation hearing, but is made earlier for the sake of efficiency. Moreover, the motion is clear that the Oversight Board does not seek to preclude any proffers of evidence concerning whether the Plan is consistent with the certified fiscal plan. The Oversight Board merely seeks a ruling that the Title III court lacks subject-matter jurisdiction to review the Oversight Board’s certification of the Plan as consistent with the fiscal plan.”


The oversight board certified the debt adjustment plan as consistent with the fiscal plan pursuant to PROMESA. The fact that the plan contemplates that the confirmation order will contain a determination that the plan is consistent with the fiscal plan in accordance with PROMESA § 314 is not to the contrary, the board contends. Consistency between the fiscal plan and debt adjustment plan is just one of many issues to be determined at confirmation, and it does not “dictate” the outcome of the confirmation process, the board said.

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