Puerto Rico judge OKs addition of HTA plan of adjustment changes

Puerto Rico bankruptcy Judge Laura Taylor Swain directed the Puerto Rico Oversight Board to include changes to the Highways and Transportation Authority plan of adjustment negotiated between Assured Guaranty and two investment funds.

She also said the changes to the plan should reflect the resolution of two other conflicts that had existed until a few weeks ago but have since been resolved. Swain filed her order in the HTA bankruptcy late Wednesday.

Swain also directed the changes for all these disputes be made not only to the plan of adjustment, but also the proposed findings of fact and conclusions of law, the proposed order and judgement confirming the plan, and other relevant plan material.

Bloomberg News

Investment funds Franklin Advisors and Nuveen had argued the two options for payment of their Assured-insured bonds offered in the plan of adjustment did not guarantee return of the premium they had paid for the bonds.

Assured had asked Swain to ignore the funds' concerns and to simply approve the plan of adjustment as the board was presenting it.

On Tuesday evening the funds and Assured jointly filed proposed changes to the the plan of adjustment and other documents that would settle their dispute.

Swain's order responds to those proposed changes by directing the proposed changes be included in the plan. She told the board to submit the revised documents no later than 5 p.m. Wednesday.

There is still a dispute outstanding about the plan's impairment of some HTA employees' wages. Since Swain did not direct the board to change its proposed plan on this issue, this may be an indication that she does not see a legal problem with the board's proposed impairment.