Puerto Rican bankruptcy judge Laura Taylor Swain has set February 10 as the deadline for the parties to reach terms of a deal on central government debt in Puerto Rico.
In a separate action, she dismissed a motion for a judicial inquiry into mediation participants engaged in insider trading on Puerto Rican bonds.
Swain, a U.S. District Court judge in Puerto Rico, said parties would have until February 10 to at least come up with a list of conditions and preferably an adjustment plan and disclosure statement. In addition, on that date, the parties must publish a schedule for the remaining plan confirmation events. She rendered her decision Wednesday in a Title III omnibus bankruptcy hearing.
In early October, four investment fund groups holding Puerto Rican bonds filed a petition for the court to impose tight deadlines on the Supervisory Board for progress.
They asked the court to require the board to do one of three things by November 20: assert that it will try to finalize the existing proposed adjustment plan announced in February; file an amended version of the existing plan with an amended disclosure statement; or file a new adjustment plan proposal and disclosure statement. He asked the court to require additional delays beyond.
Swain said the proposed deadlines were “inappropriate and drastic”. She said anticipated changes in board composition, a new governor and pressures associated with the impact of COVID-19 on the island have caused her to want to give more time to the board. . Nonetheless, she said, a deadline would help.
She ruled that if the board did not submit an adjustment plan and disclosure statement as well as a conditions sheet by February 10, it must submit by that date a “very tight” schedule to follow up. of these documents.
If the council does not meet the deadline, the court may consider “stricter measures,” Swain said.
Swain said she would enter into a written order resuming her oral decision at Wednesday’s hearing.
She said she hoped for a plan that was as consensual as possible: a plan with the support of a broad group of stakeholders.
In a separate decision on Wednesday, Swain rejected a motion by bond insurer National Public Finance Guarantee asking it to appoint an independent investigator to investigate alleged insider trading by investment funds that have participated since 2019 in the negotiation of the announced Puerto Rican debt deal. The board said the announced debt deal is too generous. He is negotiating privately with the funds to change the terms of the deal.
Swain said neither Puerto Rico’s Surveillance, Management and Economic Stability Act nor its parts incorporated into the bankruptcy code allowed him to conduct an investigation. The US Congress excluded parts of the code that allowed for an investigation when it created PROMESA.
She said the NPFG’s argument is based on PROMESA section 105, but that section gives little power to the court.
National’s insider trading charges are “sensational and largely speculative,” Swain said, especially as they claim to show a problem with court procedures as opposed to possible misconduct in the securities markets .
External prosecution and regulatory bodies can investigate the suspected trade. The government of Puerto Rico should not “fund” it, as it would if the court ordered the investigation requested by the National.
National may challenge the plan at a later date as part of proceedings over the plan, Swain said.
Swain said she was deeply concerned that the procedure was seen as fair and appropriate. However, law enforcement is better at investigations, she said.
