By The Star Staff
Puerto Rico will not be able to discharge close to $400 million in just compensation claims as part of the commonwealth bankruptcy because the U.S. Supreme Court has declined to review a lower court ruling.
The U.S. First Circuit Court of Appeals had upheld in July a lower court ruling that required the island government to pay just compensation to individuals and others whose property was taken as part of eminent domain and reverse condemnation procedures.
The decision means that plaintiffs who had property taken before Puerto Rico filed for Title III bankruptcy will receive compensation they were entitled to had the government never filed for bankruptcy. The ruling will not affect the amount bondholders are legally owed but will affect how much money the Puerto Rico government has to make the payments.
Before the plan of adjustment for the commonwealth was approved in January of last year, the Financial Oversight and Management Board for Puerto Rico argued before U.S. District Judge Laura Taylor Swain that most of the eminent domain and reverse condemnation claims could be treated as general unsecured claims in the bankruptcy.
The oversight board late Tuesday said the following: “The Oversight Board takes note of the Supreme Court’s decision and will comply with the previous rulings by the U.S. District Court for the District of Puerto Rico and the U.S. Court of Appeals for the First Circuit to require payment in full of certain unsecured claims against the Commonwealth in the cases under Title III of PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act].”