Notices of the deadline for filing proofs of claim in Puerto Rico’s five Title III bankruptcy cases are being sent out this week.
Title III Judge Laura Taylor Swain set Feb. 26 as the deadline for the notices to be delivered by the postal system. However, Gerardo Portela Franco, the executive director of Fiscal Agency and Financial Advisory Authority, said that the notices would start to be sent out this week.
The five Title III entities have at least $52.5 billion in debt outstanding making them together the largest municipal bankruptcy in U.S. history.
The notices will tell creditors that they have until 4 p.m. Atlantic Standard Time on May 29 to file a proof of claim in the cases. The requirement to file a proof of claim by a given date is a standard practice of Chapter 9 municipal bankruptcy and the Title III process includes it, said Chapman Strategic Advisors managing director James Spiotto.
Most bondholders won’t have to do anything to have their interests represented. That is because Swain is allowing the bonds’ trustees to file a “master proof of claim” for all the bondholders.
If bondholders don’t have a trustee on their bonds, they should file the proof of claim.
The issuers in Title III are the Commonwealth of Puerto Rico, Puerto Rico Sales Tax Financing Corp. (COFINA), Employees Retirement System of the Government of the Commonwealth of Puerto Rico, Puerto Rico Highways and Transportation Authority, and the Puerto Rico Electric Power Authority.
Those who don’t file a timely-filed proof of claim or trustee proof of claim, will lose any claim to compensation for their bonds and their rights to vote for any plan of adjustment in the case.
If previous or current bondholders believe they have been adversely affected by security fraud, they should also submit a claim, Spiotto said. The trustee’s claim filing will not address these sorts of claims.
On Tuesday, PREPA bond trustee U.S. Bank National Association posted a notice to the Electronic Municipal Marketplace Access site saying that it planned to file a proof of claim on behalf of the bondholders. Normally, bondholders would not have reason to file their own claims.
However, U.S. Bank National continued, “if you believe that you may have separate or additional claims against the authority other than the claims with respect to principal, interest and other amounts owing on your bonds or have claims against other Title III debtors or other persons or entities concerning your bonds or otherwise, you should consult with your legal professionals regarding those claims and take appropriate action within the applicable time period.”
The notice of deadlines for filing proofs of claim and the attached proof of claim forms will provide instructions about what information is requested.
The proof of claims should be mailed to: Commonwealth of Puerto Rico, Claims Processing Center, c/o Prime Clerk LLC, Grand Central Station, P.O. Box 4708, New York, NY 10163-4708 or submitted electronically at https://cases.primeclerk.com/puertorico/epoc-index. The bar date notice and proof of claim form can be found at https://cases.primeclerk.com/puertorico/.
More information on these topics can be found in document number 2521 of the Puerto Rico Title III bankruptcy case (case 17-03283) on the Prime Clerk Puerto Rico site or in the legal notice that appeared in the Feb. 22 issue of The Bond Buyer.