July 29, 2021

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“It is not personal, it is business,” says the new member of the JCF who leaves the meeting

In order to ensure that the necessary quorum was not given to approve a negotiation process with creditors and that it allowed to file amendments to the Adjustment Plan

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San Juan – The member of the Fiscal Control Board (JCF) appointed by the president of the United States, Donald John Trump, Justin Peterson, left the meeting held by the federal entity created under the PROMESA Act on Friday afternoon, to ensure that it did not the necessary quorum be given to approve a negotiation process with creditors and to allow the filing of amendments to the Adjustment Plan.

The unapproved amendment sought to lower debt payments from $ 1.5 billion to $ 1.05 billion a year.

The other amendment sought that the 8.5 percent pension cut agreed with the Official Retiree Committee would start from people who receive $ 1,500 or more.

In the Plan of Adjustment approved in February, the cut starts from people who receive $ 1,200 or more.

Peterson’s abrupt departure came after Ana Matosantos asked for clarification of the language of a motion presented by executive director Natalie Jaresko, in terms that before presenting the amendment to the Adjustment Plan to Judge Laura Taylor Swain, she had to sit down with the creditors again and reach an agreement.

If no agreement was reached, the amended Fiscal Plan was filed without the consent of the bondholders.

“What my colleague is recommending is not what we agreed on in the Resolution. What we agreed was that the negotiations have to take place prior to any filing and we are not going to give any authorization to the employees at this time to file anything at this time. So I’m leaving and there’s no quorum, ”Peterson said.

The situation prompted the Board’s advisor, Jaime El Kouri, to recommend to President David Skeel that he establish in the record that there was no quorum from that moment forward.

“At this time we have three members present and we need a minimum of four to establish a quorum to approve anything from now on. The decisions that were made prior to this situation if they had a quorum, “said Skeel.

Peterson had already caused annoyance in some of the members of the Board, when he anticipated that he opposed the amendment of the Adjustment Plan. In his opinion, the document was not equitable in dealing with pensioners and creditors.

“This agreement gives more money to pensioners who have been collecting and takes money away from bondholders who have not collected anything in this entire process. I think that’s not fair, ”Peterson said in one shift.

Then, he accused the rest of the members of the Board of not taking seriously the priorities of the Government of Puerto Rico.

“I do not believe this has been handled responsibly and in good faith. Please don’t take it personally. But what I want to say is that this has been managed on the run to give more money to pensioners before a new board arrives. Because we are going to be honest, in a short period of time we are going to have a new board and this ignores that fact “, mentioned Peterson, noting that in addition to being against it, he reserved” other tools at his disposal (such as regulations on the quorum) to prevent that from being passed.

“But I don’t want to do it, so as not to derail the process,” he anticipated.

“I hope you will consider stopping using the expression that ‘we are not acting in good faith.’ I am sure that everything we have done since day one has been in good faith. Another thing, since the appointments of many of us expired a year ago, if we kept waiting for other people to be appointed, nothing would have been done. There will be a new meeting tomorrow or in 6 months, but this process is going to take time, ”the chairman of the board replied to Peterson.

“It’s not personal, it’s business,” Peterson replied.

Peterson, who admitted that he is not a lawyer, stated that the motion proposed by Jaresko constituted a violation of contract that would be challenged in court.

The comment prompted Jaresko to consult with Brian Rose, one of the board’s attorneys. Rosen assured that the amendment did not constitute a violation of contract.

“I am not a lawyer, but what you say is not correct. This is a violation of contract, ”Peterson rebutted.

The rest of the members -including the representative of the governor on the board, Omar Marrero- argued without success that it was necessary to amend the Fiscal Plan to take into account the situation in Puerto Rico, after the two hurricanes, the earthquakes in the south. -Southwest and the COVID-19 pandemic.

At the press conference, Skeel was optimistic that in the future they will be able to get the fourth vote required to pass, should Peterson continue with the strategy of leaving the meetings in order not to get a quorum.

“I am optimistic that we will make decisions. We were unable to do so on one matter, but I’m hopeful that we can get back to that matter soon and have a quorum. But the truth is that without a quorum we cannot make decisions ”, he mentioned.

“We understand that this is a generous and realistic plan that makes sense. And it is certainly a step forward, because it gives more protection to retirees and creditors, because if their projections turn out to be correct, in the end they will receive more money than the current plan provides ”, he added.

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