The little willingness that the Oversight Board (OB) and the Ricardo Rosselló Nevares administration showed to share financial information was revealed yesterday in the judicial record of the first Title III hearing, when two lawyers reported to the Court the obstacles their clients faced to participate in the negotiations of the public debt of Puerto Rico.
"Good faith is critical as we move forward," said Marcia Goldstein, legal representative of the municipal insurer National Public Finance Gurantee and partner of the law firm Weil, Gotshal & Manges.
According to Goldstein, “transparency” is necessary in order to negotiate and it is also necessary to be provided with enough information about public finances, something that has not happened to date.
"We are disappointed with what has happened," concluded the lawyer.
"The current fiscal plan violates the federal law PROMESA," claimed attorney Ellen M. Halstead, representative of Assured Guaranty and member of the firm Cadwalader, Wickersham & Taft.
As stated by Halstead, the OB and the The Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF, Spanish acronym) "refused" to discuss the approaches and reasonings that led to the fiscal plan certified on March 13th. As a result, she said that her client had no choice but to file an adversarial proceeding against Puerto Rico on May 3rd. This, once the OB filed the petition of Title III of PROMESA for the Central Government and the Puerto Rico Sales Tax Financing Corporation (Cofina, Spanish acronym). Halstead then hinted that in order to advance negotiations the fiscal plan will have to be modified "substantially."
Goldstein and Halstead's statements came just yesterday, almost when the first Title III hearing presided by Federal District Judge Laura Taylor Swain was finishing.
There, the attorneys reaffirmed the allegations that insurers and bondholders made in March and April, when they criticized the reluctance of the OB and the AAFAF to discuss the assumptions of the fiscal plan and that it only spends between 4% and 6% of the Government collections to service the debt.
In the opinion of Goldstein, at present, the possibility of prosecuting a voluntary negotiation between the parties is "very, very far" because there is no reliable, serious and open financial data to take informed decisions.
The restructuring expert said that it is not just a question of enabling a virtual data room , it is a question of having clear and sufficient financial information.
She also claimed that the information that validated the tax plan was requested and was not provided.
The PREPA case. Goldstein explained that her client participated in the negotiation with The Puerto Rico Electric Power Authority a process that was carried out during the Alejandro García Padilla administration.
"The important part was transparency," Goldstein said when she posed that transparency made it possible to reach an agreement in the PREPA case.
Riposte of the AAFAF. Immediately, AAFAF lawyer and O'Melveny's associate, John Rapisardi, called the lawyer's comments "unfair" and said that he personally witnessed his client's efforts to prepare the virtual data room that was enabled during the negotiations.
Rapisardi remarked that the provision "is not perfect, not complete", but that a genuine effort has been made to share information.
"Here, there are some groups that want information, some of it that can not be provided at a given moment because of privilege, because they are working documents, because they are living models. They will have access to all that once they are final products like the Fiscal Plan”, quoted Puerto Rico's representative to the OB, Elías Sánchez Sifonte.
"This administration has shown the greatest amount of information available to all of them, in order to be able to scrutinize, to analyze. This had never been done before. They will argue their case, but what they say is not necessarily the truth”, he added.
Ricardo Cortés Chico collaborated in this story.
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