|
U.S. District Judge Laura Taylor Swain ruled that the creation
by the U.S. Congress of a financial oversight board for Puerto
Rico under a law known as PROMESA and the appointment of the
board's members did not violate the U.S. Constitution.
"The oversight board’s statutory objectives and scope of
authority thus mark its character as territorial rather than
federal," Swain's ruling said.
Aurelius Capital Management, an investment firm with a specialty
in distressed debt, filed a motion last year arguing that the
board's creation violated the U.S. Constitution's Appointments
Clause. The hedge fund sought to dismiss the board's May 2017
federal court case to restructure the territory's roughly $120
billion in debt and pension liabilities.
An Aurelius spokesman said the hedge fund declined to comment on
the ruling.
Under the 2016 federal PROMESA law, Congress appointed six
members to a board tasked with managing the territory's
finances, with then-President Barack Obama adding a seventh.
PROMESA gave the board authority to push fiscally struggling
Puerto Rico into a court-supervised restructuring akin to U.S.
bankruptcy.
"As stated in Judge Swain’s opinion, PROMESA empowers the
Oversight Board to ‘approve the fiscal plans and budgets of the
Commonwealth and its instrumentalities’ and ‘override
Commonwealth executive and legislative actions that are
inconsistent with approved fiscal plans and budgets,’" the
oversight board said in a statement on Friday.
Swain, who is overseeing Puerto Rico's case, previously
dismissed a lawsuit by Aurelius and other investors over the
territory's default on its general obligation bonds.
(Reporting by Karen Pierog in Chicago; Editing by Daniel Bases
and Leslie Adler)
[© 2018 Thomson Reuters. All rights
reserved.] Copyright 2018 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
