For municipal bond investors and insurers, recent events in Puerto Rico have become a major concern. Puerto Rico has tried to address its mounting debt crisis by enacting legislation that would create, in effect, a quasi-bankruptcy court to provide restructuring relief for certain public corporations that have issued revenue bonds, including the Puerto Rico Electric Power Authority, the Puerto Rico Aqueduct and Sewer Authority and the Puerto Rico Highways and Transportation Authority.
On Saturday, June 28, Puerto Rico’s Governor Padilla signed into effect Puerto Rico’s new bankruptcy law for certain revenue bond issuers. Within 24 hours of the statute’s enactment, two mutual fund complexes owning approximately $1.7 billion in bonds of the Puerto Rico Electric Power Authority (PREPA) filed a complaint in the federal district court for Puerto Rico, seeking a declaratory judgment invalidating the fledgling legislation.
The Supreme Court has spoken once again on the limited jurisdiction of the bankruptcy courts, adding to the understanding derived from Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), Granfinanciera v. Nordberg, 492 U.S. 33 (1989), Langenkamp v. Culp, 498 U.S. 42 (1990) and Stern v. Marshall, 131 S. Ct. 2594 (2011). Executive Benefits Insurance Agency v. Arkinson, Chapter 7 Trustee of the Estate of Bellingham Insurance Agency, Inc., 573 U.S.
Puerto Rico’s Governor Alejandro Garcia Padilla today introduced debt restructuring legislation which he urged the legislature to enact by June 30 and which, if enacted, would provide a judicial debt relief process in Puerto Rico’s courts for certain public corporations, including the Puerto Rico Electric Power Authority (“PREPA”), the Puerto Rico Aqueduct and Sewer Authority (“PRASA”) and the Puerto Rico Highways and Transportation Authority (“PRHTA”). Despite a semantic effort at today’s press conference by the Governor and in the legislative preamble to distinguish the proposed leg
The First Circuit Court of Appeals in In re SW Boston Hotel Venture, LLC, 2014 U.S. App. LEXIS 6768 (1st Cir. Apr. 11, 2014) recently ruled on a number of issues critical to valuing a secured claim in bankruptcy. Specifically, the court 1) endorsed the use of a “flexible approach” to value collateral under the circumstances of this case, 2) recognized that the date collateral should be valued is the lender’s burden to prove, and 3) confirmed that the pre-petition agreement’s default interest rate should generally be used to determine the post-petition interest rate.
On June 9, 2014, the Supreme Court issued a decision in Executive Benefits Insurance Agency v. Arkison, a case that tested the extent of the jurisdiction of bankruptcy court judges to decide fraudulent transfer and certain other claims against non-debtors. Ropes & Gray LLP represented the petitioner in obtaining certiorari and in the Supreme Court proceedings.
Debtors must provide known creditors with actual notice of a claims bar date if they want the bar date to apply to those creditors. Such was the holding in In re Majorca Isles Master Association, Inc., Case No. 12-19056-AJC, Dkt. No. 222 (Bankr. S.D. Fla. March 27, 2014), where the bankruptcy court stated that when both a debtor and a creditor are “guilty in the handling of a claim and the [d]ebtor is aware of the creditor’s claim, then a tie goes to the creditor[,]” and the creditor’s claim will be allowed.
Last Tuesday, Puerto Rico sold its much-ballyhooed $3.5 billion in non-investment grade general obligation bonds. Two days later, two legislators in Puerto Rico’s Senate filed a bill which, if enacted, would permit insolvency filings by Puerto Rico’s public corporations in Puerto Rico’s territorial trial court. The juxtaposition of the two events has some bond investors crying foul.
LONDON - The Court of Appeal in the case of Re Game Station1 has held that rent payable by a tenant that enters administration is a priority expense of the administration while the leasehold premises are being used for the benefit of the administration.
In a recent decision by the United States Bankruptcy Court for the Southern District of New York, Weisfelner, v. Fund 1, et al. (In re Lyondell Chem. Co.), 2014 Bankr. LEXIS 159 (Bankr. S.D.N.Y.