Puerto Rico ad hoc GO bondholders file objection to PBA, other bonds

By Wendy Van Sickle

Columbus, Ohio, April 3 – The ad hoc group of general obligation bondholders filed a conditional claims objection in the Commonwealth of Puerto Rico’s bankruptcy case, seeking to disallow claims asserted against Puerto Rico by the Public Buildings Authority (PBA), holders of all the authority’s bonds and holders of some series of general obligation bonds.

In total, 27 series of bonds with a face amount of about $6.1 billion are targeted by the ad hoc group's objection, according to a news release.

The bonds targeted by the objection are different from the three series of general obligation bonds selectively targeted by the claim objection filed on Jan. 14 by the oversight board and the official committee of unsecured creditors.

The ad hoc group said it will in due course dispute the oversight board's and unsecured creditors committee's objection, although the ad hoc group’s objection is based on the assumption that some tenets of the other two bodies’ objection are correct.

The oversight board’s and unsecured creditors committee's objection contends that the PBA “has always been a sham; that what were fraudulently advertised to the capital markets and the people of Puerto Rico as bonds issued by the PBA were really issued by the commonwealth; and that those fraudulently advertised bonds should be retroactively counted against the commonwealth’s debt limit – something that has never before happened in any state or territory,” according to the release.

“Perversely, the [oversight] board and the [unsecured creditors committee] are not seeking to invalidate the PBA bonds issued pursuant to this purported fraud but rather three series of general obligation bonds issued in 2012 and 2014.

“If the [oversight] board and the [unsecured creditors committee] have their way, not only would the PBA bonds pay no price for this supposed artifice, they (and many other creditors) would receive a huge windfall at the expense of those three series of general obligation bonds.”

The ad hoc group said its objection “seeks to place responsibility for the purported fraud where it belongs.”

The group called the path taken by the oversight board and unsecured creditors committee “extreme and unprecedented” and said by taking that path they “have chosen to squander what little is left of Puerto Rico's credibility with investors and to launch a multi-year feeding frenzy for the lawyers at Proskauer Rose LLP, Brown Rudnick LLP and Paul Hastings LLP.”

Further, the release asserts that the amounts billed by the oversight board and unsecured creditors committee’s professionals and “billions of dollars of other professional expenses previously incurred” will be paid by Puerto Rico.

The Commonwealth of Puerto Rico announced its Title III petition filing on May 3, 2017. The case number is 17-03283.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.