The U.S. Supreme Court yesterday declined to review a lower court ruling upholding the validity of security interests by pension bondholders seeking Puerto Rican pension assets before the start of bankruptcy proceedings, Pensions & Investments reported. The validity of the claims themselves is still being litigated at the U.S. District Court level. The court declined a petition by Puerto Rico's Financial Oversight and Management Board and the Employees Retirement System of the Government of Puerto Rico that sought to reverse a January lower court decision siding with ERS bondholders holding more than $3 billion of ERS bonds. The oversight board sued to invalidate those claims and to recover principal and interest payments of nearly $400 million made to ERS bondholders. The January decision reversed a 2018 ruling by the judge overseeing Puerto Rico's complicated bankruptcy proceedings, U.S. District Judge Laura Taylor Swain in San Juan, who said the ERS bondholders' security interest was invalid in part because of incorrect names on some of the agreements. Her ruling was later reversed by the U.S. Court of Appeals for the First Circuit, which prompted the oversight board's petition to the Supreme Court, arguing that the Boston court "committed blatant errors of law that threaten the ability of creditors across the nation to engage in secured lending."
