Title III bankruptcy Magistrate Judge Judith Dein ordered the Puerto Rico oversight board and government to provide more information for a possible independent investigation into the territory's debt.
The Official Committee of Unsecured Creditors, led by attorney Luc Despins, asked in mid-May to be allowed to conduct its own investigation, which would start no later than Aug. 15.
The committee said an existing investigation, being conducted by Kobre & Kim under a Sept. 1, 2017, contract, is undermined by the potential bias of three board members who have present or past connections to Puerto Rico’s municipal finance industry. It fails to look into “identifying bad actors or potential causes of action” against existing debt, the committee argued.
On Thursday the U.S. District Court for Puerto Rico posted Dein’s order. requiring the board is to provide a report to the court by June 13 concerning Kobre & Kim’s position on three topics.
First, Kobre & Kim should comment about possibly disclosing search terms and custodians to the committee and Official Committee of Retired Employees of the Commonwealth of Puerto Rico. Second, it should comment on the availability of its gathered documents (other than those from the Government Development Bank and two local banks) to the two committees. And third, it should describe an exit plan that it plans to submit.
Dein also ordered Puerto Rico’s Fiscal Agency and Financial Advisory Authority to provide a report to the court by June 13 on the status of production of GDB documents to the unsecured creditors committee and the retiree committee.
Dein said that she would hold a hearing on the Unsecured Creditors Committee’s motion for its own investigation in Boston at 2 p.m. on June 18.