Puerto Rico HTA employees request stay of plan of adjustment

Current and former employees of the Puerto Rico Highways and Transportation Authority and their spouses requested a stay of the HTA plan of adjustment Monday in a filing with the U.S. District Court for Puerto Rico, which is overseeing the HTA bankruptcy.

The court approved the plan earlier this month.

Puerto Rico bankruptcy Judge Laura Taylor Swain gave parties until 5 p.m. Friday to file responses, and the employees have until 5 p.m., Nov. 1 to comment on the responses.

At that point, Swain will issue a ruling unless she decides a hearing is needed.

The employee group, the Vazquez-Velazquez group, says federal law mandates their wages be paid in full. This summer in written argument to Swain, the Puerto Rico Oversight Board rejected this, saying a court had dismissed their claims. The board said the Puerto Rico Oversight, Management, and Economic Stability Act allows the overriding of federal laws.

Puerto Rico Attorney John Mudd is representing the group and in August he told Swain the HTA workers should get compensated as promised and not be impaired in a municipal bankruptcy.

Puerto Rico Board Attorney Brad Rosen said federal law had nothing to do with the workers’ compensation and even if it did, the board believes the pay is dischargeable in bankruptcy.

According to the terms of the HTA plan of adjustment, holders of $4.3 billion of HTA bonds would receive $1.2 billion of new bonds with 5% coupons and $389 million of cash. The generosity of the deal depends on the type of HTA bond held.

Holders of HTA bonds might also receive recoveries through clawback contingent vehicle instruments.

In his filing, Mudd argued his clients had a reasonable chance of prevailing on appeal to the U.S. Court of Appeals and would experience irreparable harm without the stay, which, if issued, wouldn’t injure other parties.