Puerto Rico bondholders ask bankruptcy court to dismiss Title III case

By Caroline Salls

Pittsburgh, Aug. 7 – Commonwealth of Puerto Rico bondholders Aurelius Investment, LLC, Aurelius Opportunities Fund, LLC and Lex Claims, LLC asked the U.S. Bankruptcy Court for the District of Puerto Rico to dismiss the commonwealth’s Title III case, according to a motion filed Aug. 7.

Specifically, the bondholders said the case should be dismissed because of the Financial Oversight and Management Board for Puerto Rico’s “lack of lawful authority to initiate these proceedings.”

In addition, the bondholders said the Title III petition is inconsistent with the provisions of the Puerto Rico Oversight, Management, and Economic Stability Act (Promesa).

The bondholders also raised issue with the selection process for the members of the oversight board.

“The board members were picked from secret lists devised by individual members of congress and never subjected to the sunshine of senate confirmation,” the motion said. “The senate as a whole was thus absolved of any political responsibility for the suitability of the board members and, ultimately, the part they would play in deciding Puerto Rico’s financial future.

“True public accountability for the board thus lies with no one.”

As a result of the board’s unconstitutionality, the bondholders said its acts are void.

The Commonwealth of Puerto Rico announced its Title III petition filing on May 3. The case number is 17-03283.

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