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Puerto Rico: Bankruptcy court rejects bond trading investigation
By Sarah Lizee
Olympia, Wash., Oct. 28 – The bankruptcy court for the Commonwealth of Puerto Rico’s Title III case denied a motion filed by creditor National Public Finance Guarantee Corp. for an independent investigation of G.O. bond and PBA bond trading during a mediation process in 2019 and 2020, according to an order filed Tuesday in the U.S. Bankruptcy Court for the District of Puerto Rico.
National Public Finance Guarantee said in its motion that while participating in the court-ordered mediation, certain hedge fund creditors may have engaged in improper trading in the debtors’ securities, realizing significant profits and improperly positioning themselves to negotiate based on illegitimate incentives and motives.
“Such conduct would have materially undermined and negatively impacted the mediation that resulted in the new [plan support agreement], and, according to the recent announcement from the [Financial Oversight and Management Board] and the signatories to the new PSA with whom the FOMB continues to negotiate, may likely yield a structurally similar agreement,” the creditor said.
The Commonwealth of Puerto Rico announced its Title III petition filing on May 3, 2017. The case number is 17-03283.
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