Assured Guaranty Corp. v. Commonwealth of Puerto Rico, No. 20-1930 (1st Cir. 2021)
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The First Circuit affirmed the order of the Title III court denying relief from an automatic stay under 11 U.S.C. 362(d), holding that the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) Title III court in Puerto Rico did not abuse its discretion in denying relief from the stay.
These companion cases from the Title III court involved bonds issued by the Puerto Rico Infrastructure and Financing Authority (PRIFA) and the Puerto Rico Highways and Transportation Authority (HTA). Appellants had insured millions of dollars of these bonds against default. When HTA and PRIFA defaulted on the bonds, causing Appellants to make payments to their insureds, Appellants brought this suit against Puerto Rico, HTA, and PRIFA. Thereafter, Puerto Rico petitioned to begin Title III proceedings under PROMESA, triggering an automatic stay of certain claims against them. Appellants sought relief from the automatic stay under section 362, as incorporated by PROMESA. The Title III denied relief. The First Circuit affirmed, holding that there was no cause to lift the stay as to any of Appellants' claims.
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