The Committee has entered into court-approved stipulations with the Oversight Board under which it has agreed to serve as co-plaintiff with the Oversight Board to pursue certain causes of action on behalf of the Commonwealth, ERS, and HTA.  Pursuant to these stipulations, and as part of its responsibility to increase the funds available to unsecured creditors, the Committee joined the Oversight Board in filing a number of adversary proceedings in May 2019 on behalf of the Commonwealth, ERS, and HTA.  The adversary proceedings were filed in May 2019 to preserve the applicable Debtors’ rights because the statute of limitations with respect to these Debtors’ claims expired in that month.

Critical adversary proceedings initiated by the Committee, as co-plaintiff, include:

  • Litigation to avoid and recover hundreds of millions of dollars in payments to holders of Puerto Rico bonds between 2013 and 2017.  In this litigation, the Committee and Oversight Board seek to recover payments on account of challenged Puerto Rico bonds (for example, the ERS or Commonwealth bonds being challenged by the Committee) should these bonds be ruled invalid by the court.  Click here to see a representative complaint.
  • Litigation against certain financial institutions and advisory firms to involved in the issuance of nearly $9 billion of Puerto Rico bonds.  In this litigation, the Committee and Oversight Board allege that these parties have aided and abetted the Government Development Bank’s (GDB) breach of its fiduciary duty to the people of Puerto Rico and, as a result, were unjustly enriched by receiving hundreds of millions of dollars in fees.  Click here to see a representative complaint.
  • Litigation challenging the alleged security interests asserted by certain holders of Commonwealth general obligation (GO) bonds and Commonwealth guaranteed bonds.  In this litigation, the Committee and Oversight Board argue that the so-called “Constitutional Guarantee” for GO debt or Commonwealth guaranteed debt does not create any kind of security interest in favor of bondholders, and that such bondholders are in fact unsecured with respect to the Commonwealth.  Click here to see a representative complaint.
  • Litigation challenging the alleged security interests in HTA revenues asserted by certain HTA bondholders and bond insurers.  In this litigation, the Committee and Oversight Board argue, among other things, that HTA’s bond resolutions do not grant security interests in anything beyond HTA revenues that have been both received by HTA and deposited into specific accounts with the fiscal agent under HTA’s bonds, Bank of New York Mellon, and, further, that such security interests were never perfected.  Click here to see a representative complaint.
  • Litigation challenging the alleged security interests in ERS revenues and funds asserted by certain ERS bondholders.  In this litigation, the Committee and Oversight Board argue, among other things, that these security interests extend only to employer contributions to the extent already paid to the defendants per a July 2017 stipulation between ERS and its bondholders.  Click here to see a representative complaint.