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Problems in the Code

ABI Journal

The title III debt-adjustment proceedings for the Commonwealth of Puerto Rico and its agencies have yielded several important and, in some cases, groundbreaking rulings by the U.S. District Court for the District of Puerto Rico and the U.S. Court of Appeals for the First Circuit. While some of these rulings have limited applica­tion beyond the title III cases and the Puerto Rico Oversight Management and Economic Stability Act (PROMESA), under which the cases are proceed­ing, one recent ruling by the First Circuit, involving the treatment of special revenues under § 922 (d) of the Bankruptcy Code, might have far-reaching implications potentially affecting the nearly $4 tril­lion municipal bond market. The ruling conflicts with the only other published opinion on § 922 (d) and has yielded a dissenting opinion squarely addressing the statute’s ambiguity and calling for further review “if not by this court, then by the [U.S.] Supreme Court.”

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“Problems in the Code,” by Rick B. Antonoff was published in the December 2019 edition of the ABI Journal, a publication of the American Bankruptcy Institute. Reprinted with permission.