A bond insurer can access a limited pool of information explaining Puerto Rico's cash position amid ongoing efforts to restructure the commonwealth’s debt stack, but it is not entitled to more information related to the territory's real estate assets right now, a judge ruled on Monday, Reuters reported. U.S. Magistrate Judge Judith Dein issued a pair of written decisions largely rejecting bond insurer Ambac Assurance Corp's call for more detailed explanations of Puerto Rico's cash that can be used to pay creditors and real estate properties that could be sold for the benefit of creditors. (Dein works in the Massachusetts federal court but is providing some oversight in the commonwealth's bankruptcy-like Title III proceedings.) Her rulings come as the federally appointed Financial Oversight and Management Board for Puerto Rico (FOMB), represented by Proskauer Rose, continues its efforts to build support for its proposed debt adjustment plan for the commonwealth, which would reduce $35 billion in public debt to $7.4 billion and restructure more than $50 billion in pension liabilities. Though the board has lined up support from two other major bond insurers, Ambac has not yet signed on to the proposal. Ambac, represented by Milbank, in November requested information surrounding three analyses that break down which of the commonwealth’s cash accounts are restricted — meaning unavailable to pay off creditors — and which are unrestricted. Puerto Rico has about $11.4 billion in unrestricted cash sitting in various accounts, according to court papers filed last week. In one of her two rulings on Monday, Dein held that Ambac did not prove that it needs access to so-called process documents showing the evolution of the analyses. Additionally, Dein said, the board already provided information it used to identify accounts as restricted or unrestricted and additional details Ambac seeks is likely protected by attorney-client privilege. The burden of forcing the oversight board to collect additional documents from its various advisors would outweigh any benefit Ambac would receive, she added. However, Dein granted Ambac's request to access certain materials used to calculate the analyses. The status of the cash accounts, she added, are “clearly” relevant to the proposed plan of debt adjustment.
