COR analyzes Boston's Decision regarding the unconstitutional Appointment of the FOMB

​On February 15, 2019, the United States Court of Appeals for the First Circuit ruled that the members of the Financial Oversight and Management Board (FOMB), created under PROMESA, were unconstitutionally appointed because they were not nominated by the President of the United States and confirmed by the United States Senate. It is important to note that this ruling did not dismiss the Puerto Rico bankruptcy proceedings under PROMESA’s Title III. Also, the ruling also did not invalidate the FOMB’s actions to this date, and it expressly states that it does not impact the validity of the Board’s prior actions. Moreover, the First Circuit directed that its decision would not be implemented for 90 days, and held that the FOMB may continue to act during said 90-day period.
 
It is possible that both sides of this case -the FOMB, and the bondholders, who sought dismissal of the Title III cases- may ask the Supreme Court to review the decision, as neither side received everything it asked for from the First Circuit. A petition asking the Supreme Court to review the case would be due within 90 days, unless an extension is sought. If the Court were to grant the petition and hear the case, it might not hear arguments or reach a decision until the next term, which starts in October 2019, although it is possible that the Supreme Court could expedite the process. If the Supreme Court agrees to hear the case, the it could continue the stay to allow the existing Board members to continue to act.  
 
The Official Committee of Retired Employees from the Government of Puerto Rico (COR, for its acronym in Spanish) will continue analyzing the impact of this decision on retirees and what it means for Puerto Rico’s financial future. The Retiree Committee  is the voice of the Commonwealth’s 167,000 retirees and represent their unique important interests as the largest creditor group in the Title III cases. In the meantime, it is important to remember that this decision does not change pensions, or the fact that pensions cannot be modified in any way until Judge Swain, in charge of Title III cases, confirms a plan of adjustment for the Government of Puerto Rico.
 
It is now more important than ever, that you visit www.porturetiro.com and register in our Information Directory -free of charge and confidentially- to receive information regarding the status of the FOMB and PROMESA in matters related to your pension and pension benefits.