Not one week after the Oversight Board (OB) filed a petition under Tittle III of PROMESA on behalf of the Puerto Rican government, two entities have appeared in district court with the hopes of defending the interests of public employees and retirees in the deb modification sought by the federal entity.
Similarly, almost twenty lawyers have submitted their credentials to participate in the case believed to be the biggest in the history of municipal bankruptcy cases in the United States.
According to the file of the case which is now in the hands of the federal judge for the Southern District of New York, Laura Taylor Swain, the American Federation of State, County, and Municipal Employees (AFSCME) has requested to take part in the process which is to be similar to a petition for bankruptcy.
AFSCME, the labor union that played a key role during the 1990s when former governor Pedro Rosselló gave way to the syndication of public employees in the Island, will have their own attorneys, the law firm of Saul Ewing, located in the state of New Jersey and the local law offices of Rodríguez Banchs, as legal representatives.
In the mean time, 17 organizations representing 91,000 retirees of both the central Government and the public corporations have created a committee to represent retirees and employees, as participants of the public pensions plans.
According to the motion, the Pro Retirees’ Movement of Puerto Rico (MPPR, by its Spanish acronym) was created in January of this year. The group represents retirees from school cafeterias, the University of Puerto Rico (UPR), retired teachers affiliated to the Teachers Association or Federation, police officers, the State Health Insurance Corporation and, even retirees with public pension funds residing abroad.
Petition for a separate class
In the motion the group of Retirees, that seeks to be recognized as the committee or principal figure who would negotiate the issues related with pensioned employees’ benefits, state that their leaders have met with the Oversight Board (OB) and the governor of Puerto Rico, Ricardo Rosselló Nevares, stressing at the same time that, in spite of the meetings, they have not been asked to be a part of the negotiation.
According to the group, the various retirees’ organizations who’ve not joined the effort are now showing interest to become part of the initiative.
“The demands from these retirees in terms of pension benefits, healthcare, and other post employment benefits are complex and differ totally from other kinds of unsecured debt,” states the motion signed by attorneys A.J. Bennazar-Zequeira, from Bennazar, García & Millán and Robert D. Gordon, from Clark Hill.
The latter was one of the law firms that worked closely with the adjustments during the bankruptcy of the city of Detroit. There, beneficiaries with the city’s pension plans numbered about 32,000.
“Although governor Rosselló, the OB, and the bondholders have differed in their perspectives about what the appropriate level of reductions in pension is, all have contemplated these cuts and the fiscal plan, certainly, foresees these cuts,” reads the motion by the MPPR.
According to the document, in Puerto Rico there are about 160,000 retirees from the government and its public corporations, a figure similar to the number of active employees who actively contribute monthly to their respective pension plans.
In that sense, the motion requests the creation of retirees as a separate class within unsecured creditors, because, otherwise, their interests “will probably collide directly with those of financial or commercial creditors in that committee and whose claims also total the billions of dollars.”
The motion adds that during bankruptcy processes in the cities of Stockton and Vallejo, in California, the courts recognized retirees as an individual class.
UPR and Retiro come on board
For their part, the UPR and the Pension Systems’ Administration (ASR, by its Spanish acronym) have also asked to participate in the case through their legal representative, José Alberto Sosa Llorens, a partner with DLA Piper on the Island.
Meanwhile, attorney John Mudd, also evidenced his participation in the case, on behalf of CMA Architects & Engineers, the first corporate creditor to join the suit.
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