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Puerto Rico Bankruptcy Complaint Filed

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The Financial Oversight and Management Board for Puerto Rico (FOMB) filed with the U.S. Bankruptcy Court an adversary complaint against the Hon. Ricardo Antonio Rosselló (in his official capacity as the Governor of the Commonwealth of Puerto Rico).

The complaint alleges, “PROMESA dictates that ‘[a] Fiscal Plan…shall…provide a method to achieve fiscal responsibility and access to the capital markets.’ Any fiscal plan that would ‘achieve fiscal responsibility and access to the capital markets’ in Puerto Rico may require unpopular and difficult choices. Congress insulated the FOMB from political and other pressures by providing that whether a fiscal plan satisfies the requirements set forth in PROMESA is a matter reserved to the FOMB ‘in its sole discretion.’ Congress also deprived federal district courts of subject-matter jurisdiction over challenges to the FOMB’s fiscal plan certifications.”

In addition, “PROMESA does not countenance any role for the Governor to determine whether the FOMB-certified Commonwealth Fiscal Plan (or any fiscal plan) satisfies PROMESA, or whether to comply with any portion of the FOMB-certified Commonwealth Fiscal Plan (or any certified fiscal plan). Once certified by the FOMB in its sole discretion, the Governor must comply with the fiscal plan. Accordingly, the FOMB seeks a declaration that (i) the furlough program and the pension overhaul are mandatory parts of the Commonwealth Fiscal Plan certified by the FOMB pursuant to PROMESA section 201, and (ii) the Governor must enforce and comply with all aspects of the Commonwealth Fiscal Plan, including but not limited to the furlough program and the pension overhaul. The FOMB also seeks injunctive relief prohibiting the Governor from continuing to refuse to comply with any aspect of the Commonwealth Fiscal Plan, including the furlough program and pension overhaul.”

Read more Puerto Rico bankruptcy news.

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