Claims of creditors, whose assets were confiscated by the government, shall not be denied and shall not be treated as unsecured claims subject to deduction in the Central Government’s Scheme of Adjustment (PDA) as it would be contrary to the Fifth Amendment. United States Constitution. States, the first circuit of appeals is over.
In a ruling issued this week, the federal appeals court upheld the decision of Judge Laura Taylor Swain, who upheld the central government’s PDA last January.
Therefore, Swain required the Fiscal Oversight Board (JSF) to reform the PDA, language relating to cases of forfeiture or otherwise, the revision of loans could not be approved.
From the board’s point of view, the claims of more than twenty creditors whose assets were forfeited by the state were dismissed by a federal appeals court.
Judge O. Rosary Thompson, Jeffrey R. Howard and William J. The panel composed of Kayatta was not convinced by any of the arguments that the board had used in its appeal or the “strings of misfortune” that the body had used in its argument and, in essence, they predicted chaos for the bankruptcy courts. If they had to pay for the mandatory purchase matters.
Similarly, Kayatta in his brief criticized the board’s bankruptcy process of Stockton, Calif. or the township of Nick v. Scott.
The court’s ruling said, “We refuse to interpret Nike as if it had turned the right to receive fair compensation (established) in the Fifth Amendment into a mere monetary obligation that could be set aside by law. “
“We read the Title III court decision exactly as it appears to say: that denying lawful eminent domain claims prior to the (bankruptcy) petition would be a violation of the Fifth Amendment to less compensation and that such relief Will provide unsuitable scheme for. Confirmable under ( Federal Law) Promise”, says the judge in his brief.
The First Circuit’s decision represents a victory for the diversity of the government’s creditors. From PFZ Properties, the owner of the Costa Serena land in Loiza, and the Mandri Mercado succession, a lawsuit that lasted at least a decade, to the Swiss dairy milk processors and several savings and credit cooperatives that allege their assets were acquired. State has been done.
The decision of the appellate panel does not mean that creditors will be compensated immediately. Instead, the ruling allows that if, at that point in time, the claimant creditors prove that the government has kept their immovable property or assets and that they have not been properly compensated, they will collect the full amount that would be owed in such litigation. recorded as fair compensation.
Among other things, appellate judges did not buy into the argument that forfeiture cases can be accommodated in bankruptcy proceedings, that these types of litigation can be distinguished versus funds already set aside. others who had not reached that level. A case of due process or compulsory purchase may become an unsecured claim and hence pay these creditors on the basis of the recovery of that class.
“We do not agree that the Fifth Amendment can only be read to allow loss of a claim before the bankruptcy process for compensation, because the claimant is no longer the owner of the right to the property after the (bankruptcy) petition. are,” the judge said. Why?
In short, according to Kayatta, there are many instances in the US Constitution in which the state can violate the provisions of that supreme law. But in case of forcible confiscation, the Constitution also provides for a remedy of fair compensation and hence, these cases cannot be handled with the remedies provided in other cases such as breach of a contractual relationship.
The central government’s PDA identified that the government owed more than $400 million in forcible seizure cases. If the appellate court had accepted the board’s arguments, these creditors would have received the same treatment as unsecured creditors, who would receive a few cents of every dollar the government paid them.
