Four banks on Friday fired back at a move by Puerto Rico’s federally created financial oversight board to force them to disclose customer information related to certain debt issued by the bankrupt U.S. commonwealth, Reuters reported. The board on Monday asked the U.S. District Court judge hearing the island’s bankruptcy cases to compel the banks to submit bondholder names and addresses along with related payments the bondholders received between 2013 and 2017 by an April 19 deadline. The Bank of New York Mellon, Bank of America Corp , JP Morgan Chase Bank, and U.S. Bank objected, citing concerns over disclosing confidential customer information, as well as the cost and ability to produce a large amount of information within the tight deadline. “The burden of this deadline is not merely excessive and unreasonable, but in fact it would be impossible to meet, as the requested data, to the extent it exists, is not easily accessible,” an attorney for JP Morgan stated in a letter to the board’s lawyers. In a court filing, Bank of America said there was no certainty it is even the correct entity to produce information to comply with the board’s “over broad and patently burdensome requests.” Read more.
In related news, federal court decision in Puerto Rico’s record bankruptcy that departs from past precedent in the $3.8 trillion municipal-bond market is threatening to upend the secure reputation for some types of debt, Bloomberg News reported. The legal fight could go all the way up to the U.S. Supreme Court, with the potential to erode the value of billions of dollars in bonds and ripple through a niche that finances roadways, airports and water systems. A federal court decision in Puerto Rico’s record bankruptcy that departs from past precedent in the $3.8 trillion municipal-bond market is threatening to upend the secure reputation for some types of debt. The legal fight could go all the way up to the U.S. Supreme Court, with the potential to erode the value of billions of dollars in bonds and ripple through a niche that finances roadways, airports and water systems. The decision from U.S. District Court Judge Laura Taylor Swain contrasts with how special revenue bonds have been treated in all past municipal bankruptcies under chapter 9 of the Bankruptcy Code, said James Spiotto, who specializes in that kind of restructuring as managing director at Chapman Strategic Advisors. Read more.
