Court replaces judge inclined to rule for Puerto Rico bondholders

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A judge who stated an inclination to find the United States government responsible for impairments to Puerto Rico bonds has been replaced.

On Tuesday U.S. Court of Federal Claims Chief Judge Margaret Sweeney said she was replacing Judge Susan Braden in the case Altair Global Credit Opportunities Fund (A), LLC, et al. v. the United States. Sweeney cited court rules. An attorney who is active in the claims court said Braden's 15-year term had expired.

In a mid-July 2018 opinion Braden said she was inclined to rule that the federal government was responsible for unpaid Puerto Rico Employees Retirement System bonds. However, she said that she would reserve actually ruling that way because the time wasn’t “ripe” for the ruling, because she first wanted to see how Title III bankruptcy Judge Laura Taylor Swain ruled on challenges by hedge fund Aurelius and Uníon de Trabajadores de la Industria Electica y Riego’s challenges to the Puerto Rico Oversight, Management, and Economic Stability Act on U.S. Constitutional grounds.

UTIER is the main trade union at the Puerto Rico Electric Power Authority.

Braden’s reasoning seemed to open the door to her finding the U.S. government liable for any cuts to Puerto Rico bonds, not just to the ERS bonds.

By mid-August Swain rejected the Aurelius and UTIER arguments.
Since July the Altair case has slowed to an apparent stop. From mid-July through mid-September there were three filings by attorneys for the plaintiff, defendant or jointly by both. There were no responses by Braden. Until Tuesday, when Sweeney replaced Braden, there were no further filings.

Marzulla Law Partner Roger Marzulla said in the last few days Sweeney had reassigned most or all of Braden’s cases. Marzulla Law primarily handles case in the U.S. Court of Federal Claims.

After assigning the cases to herself, Sweeney has frequently reassigned them a second time to other judges. That may still happen in this case, Marzulla said.

Marzulla said judges on the U.S. Court of Federal Claims have 15 year terms and that Braden had reached the end of the term. Tuesday’s official order cited Rule 40.1(c) of the court, which states the chief judge may reassign a case after “finding that the transfer is necessary for the efficient administration of justice.”

On Friday Braden's name was not listed as a judge on the Court of Federal Claims web site.

Neither attorneys for Altair nor spokespeople for the U.S. Department of Justice responded to a request for a comment.

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PROMESA Puerto Rico Employees Retirement System Commonwealth of Puerto Rico Puerto Rico Sales Tax Financing Corp (COFINA) Puerto Rico Electric Power Authority Puerto Rico Infrastructure Financial Authority Puerto Rico Aqueduct & Sewer Authority Puerto Rico
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