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Puerto Rico bondholders’ motion for dismissal of Title III case denied
By Caroline Salls
Pittsburgh, July 13 – A motion filed by Commonwealth of Puerto Rico bondholders seeking dismissal of the commonwealth’s Title III proceedings was denied Friday by the U.S. District Court for the District of Puerto Rico.
Aurelius Investment, LLC, Aurelius Opportunities Fund, LLC and Lex Claims, LLC asked the court to dismiss the case in an Aug. 7, 2017 motion.
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.
“True public accountability for the board thus lies with no one,” the motion said.
As a result of the board’s unconstitutionality, the bondholders said its acts are void.
In Friday’s ruling, judge Laura Taylor Swain said the oversight board is an instrumentality of the territory of Puerto Rico, and its members are not “officers of the United States” who must be appointed in accordance with the mechanism established under the Constitution.
“Since the alleged defect in the appointment method is the only ground upon which Aurelius argues that the Commonwealth’s Title III Petition fails to comport with the requirements of Promesa, Aurelius’ motion to dismiss the petition is denied,” the opinion said.
The Commonwealth of Puerto Rico announced its Title III petition filing on May 3. The case number is 17-03283.
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