PR debt insurers pull court complaints against fiscal plan

Written by  //  October 7, 2017  //  Hurricane María  //  No comments

Print Friendly, PDF & Email

Two of the Commonwealth’s main credit insurers have pulled their court complaints against the Fiscal Plan.

In what could represent the first positive for Puerto Rico in its litigation with creditors and insurance companies over debt repayment, two monoline insurers — National Public Finance Guarantee Corp. and Assured Guaranty withdrew their complaints against the Commonwealth’s Fiscal Plan.

In separate statements, the companies cited the crisis brought on to Puerto Rico by Hurricane María and its impact on lives and infrastructure as their reasons for pulling their claims.

“Hurricane María’s impact on lives, property and infrastructure on the island of Puerto Rico is without precedent,” said Bill Fallon, CEO of National Public Finance Guarantee Corporation, an indirect subsidiary of MBIA Inc.

National had filed its adversary complaint filed on May 3, 2017 which challenged the Commonwealth of Puerto Rico’s fiscal plan as certified by the Financial Oversight and Management Board for Puerto Rico dated March 13, 2017.

“With the focus quite rightly on rescue, recovery and the restoration of basic services to Puerto Rico’s citizens and a strong likelihood that the existing fiscal plan will have to be amended in the wake of the hurricane, we do not believe it would be appropriate to move forward with the litigation at this time,” he said.

“As it has for more than three decades, National will continue to support the people of Puerto Rico and we look forward to working with the Commonwealth and the Oversight Board on a revised fiscal plan that allows Puerto Rico to rebuild its infrastructure, restore its fiscal health and return to the municipal markets,” Fallon said.

Meanwhile, Assured Guaranty Municipal Corp. and Assured Guaranty Corp., also withdrew its complaint.

“While we continue to believe the current Fiscal Plan is illegal, we have determined to voluntarily dismiss our complaint without prejudice at this time due to the crisis in Puerto Rico following Hurricane Maria, and the high likelihood that the Fiscal Plan will have to be revised,” said Dominic Frederico, CEO of Assured Guaranty.

“Now is no time to be arguing over these issues, when residents of the island are suffering. The current focus should remain on restoration and relief for Puerto Rico. Additionally, it would be an avoidable misallocation of time, money and judicial resources to litigate issues about a Fiscal Plan that is expected to change,” Frederico said.

Assured Guaranty urged the Oversight Board to use this opportunity to reset its relationship with creditors, correct the defects in the current Fiscal Plan and work collaboratively with creditors on a new fiscal plan that complies with the mandatory statutory requirements of the Puerto Rico Oversight, Management and Economic Stability Act, the Commonwealth Constitution, and the U.S. Constitution.

Meeting PROMESA’s dual stated purpose of fiscal responsibility and restoration of the Commonwealth’s access to the capital markets has become even more critical in the aftermath of the hurricane damage, Assured said.

Under applicable law, Assured Guaranty is permitted to refile the lawsuit. If insufficient progress is made in developing a new fiscal plan that complies with PROMESA and respects Assured Guaranty’s constitutional, statutory and contractual rights, Assured Guaranty will refile the lawsuit at an appropriate time, it confirmed.

PR debt insurers pull court complaints against fiscal plan

In what could represent the first positive for Puerto Rico in its litigation with creditors and insurance companies over debt repayment, two monoline insurers — National Public Finance Guarantee Corp. and Assured Guaranty withdrew their complaints against the Commonwealth’s Fiscal Plan.

In separate statements, the companies cited the crisis brought on to Puerto Rico by Hurricane María and its impact on lives and infrastructure as their reasons for pulling their claims.

“Hurricane María’s impact on lives, property and infrastructure on the island of Puerto Rico is without precedent,” said Bill Fallon, CEO of National Public Finance Guarantee Corporation, an indirect subsidiary of MBIA Inc.

National had filed its adversary complaint filed on May 3, 2017 which challenged the Commonwealth of Puerto Rico’s fiscal plan as certified by the Financial Oversight and Management Board for Puerto Rico dated March 13, 2017.

“With the focus quite rightly on rescue, recovery and the restoration of basic services to Puerto Rico’s citizens and a strong likelihood that the existing fiscal plan will have to be amended in the wake of the hurricane, we do not believe it would be appropriate to move forward with the litigation at this time,” he said.

“As it has for more than three decades, National will continue to support the people of Puerto Rico and we look forward to working with the Commonwealth and the Oversight Board on a revised fiscal plan that allows Puerto Rico to rebuild its infrastructure, restore its fiscal health and return to the municipal markets,” Fallon said.

Meanwhile, Assured Guaranty Municipal Corp. and Assured Guaranty Corp., also withdrew its complaint.

“While we continue to believe the current Fiscal Plan is illegal, we have determined to voluntarily dismiss our complaint without prejudice at this time due to the crisis in Puerto Rico following Hurricane Maria, and the high likelihood that the Fiscal Plan will have to be revised,” said Dominic Frederico, CEO of Assured Guaranty.

“Now is no time to be arguing over these issues, when residents of the island are suffering. The current focus should remain on restoration and relief for Puerto Rico. Additionally, it would be an avoidable misallocation of time, money and judicial resources to litigate issues about a Fiscal Plan that is expected to change,” Frederico said.

Assured Guaranty urged the Oversight Board to use this opportunity to reset its relationship with creditors, correct the defects in the current Fiscal Plan and work collaboratively with creditors on a new fiscal plan that complies with the mandatory statutory requirements of the Puerto Rico Oversight, Management and Economic Stability Act, the Commonwealth Constitution, and the U.S. Constitution.

Meeting PROMESA’s dual stated purpose of fiscal responsibility and restoration of the Commonwealth’s access to the capital markets has become even more critical in the aftermath of the hurricane damage, Assured said.

Under applicable law, Assured Guaranty is permitted to refile the lawsuit. If insufficient progress is made in developing a new fiscal plan that complies with PROMESA and respects Assured Guaranty’s constitutional, statutory and contractual rights, Assured Guaranty will refile the lawsuit at an appropriate time, it confirmed.

Leave a Comment

comm comm comm