Judge denies oversight board motion to prevent Title III court review of debt deal’s consistency
By The Star Staff
U.S. District Court Judge Laura Taylor Swain on Wednesday denied a Financial Oversight and Management Board motion filed in Puerto Rico’s Title III bankruptcy case that sought to prevent the federal court hearing the case from evaluating whether the central government’s debt deal was consistent with the fiscal plan.
The Title III Court is slated to start confirmation hearings in November on the debt adjustment to restructure some $35 billion in debt and opponents of the debt deal want to present evidence that it does not comply with the fiscal plan.
The oversight board had argued that it already certified that the debt deal is consistent with the fiscal plan and that the certification could not be challenged.
In a motion in limine, the oversight board argued that Section 106(e) of the federal law PROMESA expressly divests the court of jurisdiction to review the oversight board’s § 104(j) certification that the plan of adjustment is consistent with the certified fiscal plan. The board, as a result, sought a ruling that evidence by debt deal opponents would be inadmissible because the court lacks subject-matter jurisdiction to review the oversight board’s certification that the debt deal is consistent with the fiscal plan.
Swain said that as a matter of law, she had to make a judicial determination on the consistency issue as a condition to confirm the debt adjustment plan.
“In general, this court has jurisdiction under Section 306 on all cases under Title III of PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act],” she said.
Likewise, Swain determined that Windmar Renewable Energy Inc. did not have standing to challenge certain confidential agreements between the Puerto Rico Electric Power Authority (PREPA) and the companies Ciro One Salinas LLC and Zxerta for the purchase of renewable energy.
Fernando Agrait, Windmar’s legal representative, pointed out that it was impossible for that company to enter the process or make proposals to PREPA if the agreements were not disclosed, and that it was the equivalent of building a wall and fostering a monopoly. He also alleged the contracts violate local laws.