Puerto Rico teachers’ groups and the Oversight Board argued before a panel of federal appeals judges Wednesday on whether the Plan of Adjustment should be stayed before it's scheduled to take effect Tuesday.
The panel of Jeffrey Howard, Rogeriee Thompson, and William Kayatta Jr. generally seemed skeptical of the teachers’ attorneys call for a stay. Howard also brought up an unrelated concern with the plan that could conceivably affect his attitude toward a stay.
The judges said they would try to issue a decision as soon as possible.
Puerto Rico’s
Teachers’ attorney Jessica Méndez Colberg told the U.S. Court of Appeals for the First Circuit a stay would be short since the Appeals Court granted the teachers’ request for expedited consideration of their appeal.
The board’s statement that it could accommodate a ruling in favor of the teachers without withdrawing the Plan of Adjustment through cuts to other areas of local government spending, she said, was “astonishing” because the board had for months repeatedly denied the possibility.
Without the stay, Méndez Colberg said, Puerto Rico will proceed and any action will be hard to unravel.
Thompson suggested the central government could simply restore the teachers’ position with money if the Appeals Court ruled in their favor.
Oversight Board attorney Martin Bienenstock repeated the
The teachers' refusal to post a bond for a stay, was another factor the judges should use to decide against them, he said.
Executing the Plan of Adjustment on March 15 is important for several reasons, Bienenstock said, including, bondholders have agreed in writing to extend their support of the deal to March 15. If that date passes, they could withdraw from the deal, killing it. They could then try to negotiate a better deal.
But Howard interrupted to say he is troubled by the plan’s specification that the local government could make changes to pensions only under specific conditions and with court approval for 10 years following the plan’s effective date.
Bienenstock said this was necessary, since even in the weeks leading up to the bankruptcy judge’s approval of the plan, the local government had passed laws saying there would be no changes to Puerto Rico’s defined benefit pension plans.
While the board and the judge quickly declared the new law void, this proves the need for a law to make sure the local government does not try to undo the plan, he said.
In her response to Bienenstock, Méndez Colberg said the board could offer to simply stay the part of the Plan of Adjustment concerning the teachers’ pensions.
