As if she understands that Puerto Rico needs a break from its institutional crisis, district federal judge Laura Taylor Swain decided yesterday to suspend adversarial proceedings and dozens of objections in PROMESA Title III cases.
After assuring her commitment to finding a solution to the island’s debt crisis, Swain told the lawyers participating in the July general hearing that she would suspend this year’s adversarial cases, as well as dozens of ongoing objections in the government’s bankruptcy cases for 120 days.
A pause in Title III process
Swain's decision came while the spokeswoman for the Citizen Front for the Audit of the Debt, Eva Prados, revealed they were writing to the judge seeking a pause on ongoing bankruptcy proceedings under PROMESA.
"We are going to send a letter requesting to stop all ongoing bankruptcy proceedings as we are facing an obvious political crisis and the eventual exit, not only of the governor (Ricardo Rosselló Nevares), but of the whole economic team," said Prados.
“There is no reason for that process to continue. Quite the contrary, it must be stopped until there is a proper transition and we know who will represent Puerto Rico. In addition, there is not only a crisis with the island’s leadership, but the Fiscal Board is also being challenged in Federal Court, ”Prados added.
Mediation process reactivated
Swain put litigation on hold and reactivated the mediation committee she created at the beginning of Title III cases. The expectation is that the group identifies the controversies, establishes an order for their discussion and processing, and identifies those that could be solved through a negotiation process.
The mediation process will be mandatory for the parties identified by Judge Barbara Houser and her counterparts.
Yesterday and over the phone, Houser accepted Swain's commission again. She said that while she was not "naive" regarding the complexity of court issues, she was convinced that she would be able to bring the parties closer to facilitate the confirmation of an adjustment plan in the central government.
This, similar to how she managed to avoid litigation regarding the sales and use tax (SUT) and the subsequent approval of the adjustment plan for Puerto Rico’s Sales Tax Financing Corp. (Cofina).
While PROMESA suspended litigation against the government once Title III was invoked, the request for that remedy by the central government and entities such as the Electric Power Authority (PREPA) and the Retirement Systems Administration (ASR, Spanish acronym) triggered multiple controversies within the process.
Since there are about twenty disputes, Swain said she would detail them in a written order.
The pause to litigations would extend until November 30 and, a month earlier, Judge Houser will have to submit a progress report to Swain.
A critical day
Swain's decision came at a time when there were no protests outside the federal court in Hato Rey. Both journalists and people who came to the hearing seemed glued to their cell phones in an attempt to know if the governor would leave office in the wake of the Telegram chat scandal and corruption cases in his administration.
During the hearing, there was no specific mention of the institutional crisis, but it was the first time that both the Board and FAFAA repeatedly told Swain that they remained focused on their respective tasks.
The Board´s lawyer, Martin Bienenstock, indicated that they will submit the central government adjustment plan in a matter of weeks, once they have compiled certain additional data.
Bienenstock also said that yesterday the Board would defend its authority over the island's budget before the Boston First Circuit Court of Appeals. That panel was examining yesterday the litigation that began last year when Rosselló Nevares alleged that the Board intended to change public policy through the fiscal plans it had certified.
Meanwhile, John Rapisardi, the government´s legal representative, assured Swain that after the departure of Christian Sobrino Vega from FAFAA, the board of directors is leading the agency and the “critical” employees continue in their positions.
Without mentioning the crisis his client faces, Rapisardi said that, for the last two and a half years, he has represented the people of Puerto Rico with “honor” and shown his “passion” and “idealism” in “peacefully."
“We have witnessed democracy in action. God bless the people of Puerto Rico, ”said Rapisardi.
Alex Figueroa Cancel collaborated with this story.