Puerto Rico bankruptcy judge to consider retail committee

Puerto Rico bankruptcy judge Laura Taylor Swain has set a timeline to consider establishing a committee to represent Puerto Rican retail bondholders.

On June 30, Swain approved a motion from a retail bondholder to review the committee, which would provide legal representation for retail bondholders in bankruptcy.

Puerto Rico bankruptcy judge Laura Taylor Swain decided to consider appointing a committee to represent retail bondholders after rejecting the idea in April 2019.

New York attorney and Puerto Rican bondholder Peter Hein had presented earlier motions to establish a committee of retail bondholders, but Swain canceled them in April 2019.

But in a June 9 filing, Hein said the new developments “now show that the court should reassess the need for a committee to represent retail investors and should now appoint a committee to represent members of the eight categories of investors. retail investors in the confirmation process. ”The proposed disclosure statement defines retail investors as those who hold less than $ 1 million in face value.

Hein’s June 9 filing made a counterclaim that asked Swain to establish the committee in the confirmation process. On the morning of June 30, Hein said he had agreed with Oversight Council lawyers on a proposed timeline for a committee’s review.

Later that day, Swain approved the schedule giving Hein until 6 p.m. Tuesday to submit a motion on the matter, the other parties until 5 p.m. on July 19 to respond, Huh until 5 p.m. on July 27 to respond to responses. Swain has promised an oral argument on the proposal on August 18.

In his motion, Hein argued that, first, retail bondholders are the only group who are not directly or indirectly paid by the Puerto Rican government and debtor authorities. Hedge funds and other investment funds that negotiated the deal with the central government will get 1.5% of the total stock to cover consumption costs.

Puerto Rico also pays for attorneys representing unsecured creditors and pensioner committees, and Hein said it’s only fair that retail bondholders are also represented by attorney.

Second, Hein said the complexity of the proposed adjustment plan and disclosure statement made it “essential” to create a committee for retail investors. The “complexity” of the plan and the statement makes them “beyond the assessment capabilities of the typical retail investor”.

“The court could set an appropriate ceiling for the expenses of professionals retained by the committee, using as a starting point of reference the level of fees incurred by professionals retained by existing committees or cash payments and payments in the form of claims. reimbursement of administrative costs that the debtors have agreed to make to other parties, ”said Hein.

Of Hein’s latest claim, Puerto Rico attorney John Mudd said, “She has denied it in the past. Maybe this time she will change her mind.

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