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Court Rules on Applicability of Make-Whole Premiums Upon Debt Acceleration

September 18, 2014 | Blog | By Leonard Weiser-Varon

The linked Mintz Levin client advisory, which discusses a recent bankruptcy court ruling regarding the applicability of a make-whole premium upon a refinancing of corporate debt following such debt's automatic acceleration upon bankruptcy under the terms of the governing documents, may also be of interest to holders of municipal bonds with call protection and/or early redemption premiums.
On August 11, Franklin Funds and Oppenheimer Rochester Funds filed a second amended complaint, opposition to motion to dismiss and cross-motion for summary judgment in the litigation they previously filed in the United States District Court for Puerto Rico challenging the constitutionality and validity of Puerto Rico’s so-called Recovery Act.

Puerto Rico and PREPA Seek Dismissal of Bondholder Challenge to Territory's Bankruptcy Statute

July 22, 2014 | Blog | By Leonard Weiser-Varon, William Kannel

The Commonwealth of Puerto Rico and the Puerto Rico Electric Power Authority (PREPA) yesterday filed separate motions to dismiss the federal court complaint filed last month by some PREPA bondholders seeking to invalidate the recently-enacted Puerto Rico Public Corporation Debt Enforcement and Recovery Act.

Be PREPAred: PREPA Bondholders Greet Puerto Rico's Bankruptcy Legislation With Federal Lawsuit

June 30, 2014 | Blog | By Leonard Weiser-Varon, William Kannel

On Saturday, June 28, Puerto Rico's Governor Padilla signed into effect Puerto Rico's new bankruptcy law for certain revenue bond issuers. 

Puerto Rico Poised to Enact Bankruptcy-Like Legislation for Certain Revenue Bond Issuers

June 25, 2014 | Blog | By Leonard Weiser-Varon, William Kannel

Puerto Rico’s Governor Alejandro Garcia Padilla today introduced debt restructuring legislation which, upon enactment, would provide a judicial debt relief process in Puerto Rico’s courts for certain public corporations.
The latest swerve in the rollercoaster that is Puerto Rico public finance occurred on April 11 with the release of the Puerto Rico Supreme Court’s ruling striking down as unconstitutional the bulk of the territory’s teacher pension reform legislation.
As indicated in the adjacent blog posts, the SEC is increasing its enforcement presence in the municipal bond market, including enforcement and self-reporting initiatives relating to disclosures about an issuer's historic compliance with Rule 15c2-12 continuing disclosure agreement obligations.
The post on our securities litigation and compliance blog titled "SEC Steps Up Scrutiny of Municipal Bonds: Recently Filed Enforcement Actions"  surveys recent SEC enforcement actions against municipal bond issuers. 
For an analysis of the SEC Enforcement Staff’s recent announcement that it is one year into a general sweep of financially distressed municipal bond issuers and that it has commenced formal investigations against some of these issuers.
Last Tuesday, Puerto Rico sold its much-ballyhooed $3.5 billion in non-investment grade general obligation bonds. Two days later, two legislators in Puerto Rico’s Senate filed a bill which, if enacted, would permit insolvency filings by Puerto Rico’s public corporations in Puerto Rico's territorial trial court.

Legal Highlights in Puerto Rico's "Draft POS" for Upcoming General Obligation Bond Issue

March 5, 2014 | Blog | By Leonard Weiser-Varon, William Kannel

Although Puerto Rico’s much-discussed sub-investment grade general obligation bond issue is not yet being marketed via an official preliminary official statement, it appears that a draft POS has been making the rounds. 

Puerto Rico Senate Not in a New York State of Mind?

February 27, 2014 | Blog | By Leonard Weiser-Varon, William Kannel

As reported by the Wall Street Journal today and by other sources, the authorizing legislation for Puerto Rico’s much anticipated $3.5 billion non investment grade general obligation issue has become hung up in Puerto Rico’s Senate over language included in the bill passed by the territory's House of Representatives.
After initially putting the brakes on the MSRB’s attempt to use underwriters of Section 529 college savings plans as its data-gathering team, the SEC has pressed the accelerator and approved an amended MSRB Rule G-45.

Puerto Rico Bondholders Await Contract Impairment Ruling in Teacher Pension Reform Litigation

February 7, 2014 | Blog | By Leonard Weiser-Varon, William Kannel

We previously discussed the Puerto Rico Supreme Court’s decision in the Hernandez case, in which by a 5-4 vote the court upheld the constitutionality under federal and Puerto Rico law of pension reform legislation affecting public sector employees.

Could Bondholders Bring Claims Against Puerto Rico Bond Issuers in Courts Outside Puerto Rico?

February 3, 2014 | Blog | By Leonard Weiser-Varon, William Kannel

As Puerto Rico prepares to access the public markets with a new bond issue, the Wall Street Journal reports that the list of demands from some potential investors include, in addition to a high interest rate and as much security as the issuer can provide, the issuer’s consent to the adjudication in the New York courts of any future disputes involving the applicable bonds.
The Government Development Bank for Puerto Rico (GDB) hosted an unusual public conference call on October 31 to respond to legal questions raised by investors in bonds issued by the Puerto Rico Sales Tax Financing Corporation, better known by its Spanish acronym, COFINA.
The U.S. Court of Appeals for the Second Circuit has upheld a bankruptcy court’s decision enforcing indenture language providing for the automatic acceleration, without make-whole premium, of secured American Airline, Inc. notes upon American Airline Inc.’s bankruptcy filing. 
A series of alternative proposed Initiative Petitions were filed Thursday, August 7, with the Office of the Attorney General of Massachusetts (the “AGO”) seeking primarily to establish specified limits on operating margins achieved by many Massachusetts hospitals and on the compensation of the CEOs of such hospitals. 

Valuing Advance Refundings

August 12, 2013 | Blog | By Leonard Weiser-Varon

Advance refundings may be an appropriate target for the semi-jocund question, "sure it works in practice... but does it work in theory?" 

Constitutionality of Detroit's Emergency Manager Challenged

April 4, 2013 | Blog | By Leonard Weiser-Varon, William Kannel, Adrienne K. Walker

Within days of Kevyn Orr’s appointment as Detroit’s Emergency Manager, a group of elected officials, union representatives, civil rights activist and clergy brought a lawsuit against Gov. Rick Snyder and Treasurer Andy Dillon in federal court, challenging the constitutionality of Public Act 436.
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