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Public Finance Matters Updates on recent public finance and municipal bond developments

Tag Archives: bonds

IRS Clarifies New Management Contract Safe Harbors

Posted in Tax/arbitrage

By MAXWELL D. SOLET and CHRISTIE MARTIN In August, 2016, the IRS issued Revenue Procedure 2016-44, the first comprehensive revision of its management contract safe harbors since Revenue Procedure 97-13.  Rev. Proc. 2016-44 (see our description here) built upon and amplified principles laid out in private letter rulings issued over many years and in Notice… Continue Reading

Three Strikes and Recovery Act is Out

Posted in Bankruptcy

By LEN WEISER-VARON and BILL KANNEL Today’s U.S. Supreme Court decision in Commonwealth of Puerto Rico v. Franklin California Tax-Free Trust puts an end to one of Puerto Rico’s multi-pronged efforts to deleverage itself.  Given the comprehensiveness of the First Circuit’s intermediate appellate opinion upholding the district court’s invalidation of Puerto Rico’s Recovery Act, it was… Continue Reading

You Can Lead a Horse to Water, But You Can’t Call it an Airplane: Supreme Court Oral Arguments Suggest Puerto Rico’s Recovery Act May Recover

Posted in Bankruptcy

By LEN WEISER-VARON and BILL KANNEL A few thoughts on Tuesday’s oral arguments before the U.S. Supreme Court in the litigation over whether Puerto Rico’s Public Corporations Debt Enforcement and Recovery Act, an insolvency statute for certain of its government instrumentalities, is void, as the lower federal courts held, under Section 903 of the U.S…. Continue Reading

Draft Treasury Legislation Would Give Puerto Rico Access to “Super Chapter 9” and Chapter 9 Bankruptcy

Posted in Bankruptcy

By LEN WEISER-VARON and BILL KANNEL   A draft of the U.S. Treasury’s proposed debt restructuring legislation began circulating earlier today.  The draft legislation would give Puerto Rico, as well as other U.S. territories, and their municipalities access to U.S. bankruptcy court under a new chapter of the U.S. Bankruptcy Code (so-called “Super Chapter 9”) as well… Continue Reading

Que Certa, Certa: Supreme Court Creates Uncertainty with “Cert” Review of Puerto Rico Recovery Act

Posted in Bankruptcy

By LEN WEISER-VARON, BILL KANNEL and ERIC BLYTHE It is said that muddy water is best cleared by leaving it be.  The Supreme Court’s December 4 decision to review the legality of Puerto Rico’s local bankruptcy law, the Recovery Act, despite a well-reasoned First Circuit Court of Appeals opinion affirming the U.S. District Court in… Continue Reading

Current and Former SEC Officials Speak About Enforcement Issues Concerning Municipal Securities

Posted in Disclosure

By JOHN REGIER and BRETON LEONE-QUICK Last week, the National Association of Bond Lawyers held its 13th Annual Tax and Securities Law Institute.  Some of the panels included current and former employees of the SEC who spoke on several of the more notable recent developments with respect to enforcement actions in the Municipal Securities space:… Continue Reading

SEC Introduces “Control Person” Liability as Enforcement Action Weapon in Claim Against Municipal Officer for Misleading Bond Offering Document

Posted in Disclosure

By Len Weiser-Varon The U.S. Securities and Exchange Commission recently settled the first securities fraud charges brought against a municipal official alleging “control person” status under the federal securities laws.  The SEC’s settlement with the former mayor of the city of Allen Park, Michigan bars him from participating in future securities offerings and imposes a… Continue Reading

Pennsylvania Amends Act 47 to Give the Commonwealth More Oversight and its Municipalities Less Time to Reorganize

Posted in Bankruptcy

By William Kannel and Adrienne Walker Pennsylvania’s legislature recently approved House Bill No. 1773, an overhaul to its Municipalities Financial Recovery Act, commonly known as “Act 47.”  HB 1773 was signed into law by Governor Tom Corbett on October 31, 2014. Act 47 was established in 1987 to provide the Commonwealth, largely through the Governor’s… Continue Reading

IRS Provides Increased Flexibility on Management Contracts for Tax-Exempt Bond-Financed Property

Posted in Tax/arbitrage

By Maxwell D. Solet On October 24, 2014, the Internal Revenue Service issued Notice 2014-67 (the “Notice”), which provides important guidance and increased flexibility for issuers and conduit borrowers of tax-exempt bonds regarding contracting with private parties in a manner that avoids “private use” by such parties of bond-financed facilities. The Internal Revenue Code restricts private… Continue Reading

Court Rules on Applicability of Make-Whole Premiums Upon Debt Acceleration

Posted in Bankruptcy, Financing Structures

BY LEN WEISER-VARON The linked Mintz Levin client advisory, which discusses a recent bankruptcy court ruling regarding the applicability of a make-whole premium upon a refinancing of corporate debt following such debt’s automatic acceleration upon bankruptcy under the terms of the governing documents, may also be of interest to holders of municipal bonds with call… Continue Reading

PREPA Bondholders Seek Summary Judgment Invalidating Puerto Rico’s Public Corporation Bankruptcy Legislation

Posted in Bankruptcy

By LEN WEISER-VARON and BILL KANNEL On August 11, Franklin Funds and Oppenheimer Rochester Funds filed a second amended complaint, opposition to motion to dismiss and cross-motion for summary judgment in the litigation they previously filed in the United States District Court for Puerto Rico challenging the constitutionality and validity of Puerto Rico’s so-called Recovery… Continue Reading

Municipal Bond Market Absorbs Puerto Rico Supreme Court’s Decision that Teacher Pension Reform Legislation is Unconstitutional Contract Impairment

Posted in State Law

BY LEN WEISER-VARON and BILL KANNEL The latest swerve in the rollercoaster that is Puerto Rico public finance occurred on April 11 with the release of the Puerto Rico Supreme Court’s ruling striking down as unconstitutional the bulk of the territory’s teacher pension reform legislation.  The outcome of the case creates some disarray in the… Continue Reading

Negligent Disclosure and Imputed Scienter: Recent SEC Enforcement Actions Against Municipal Bond Issuers

Posted in Disclosure

  The post on our securities litigation and compliance blog titled “SEC Steps Up Scrutiny of Municipal Bonds: Recently Filed Enforcement Actions”  surveys recent SEC enforcement actions against municipal bond issuers.  As discussed in the post, the SEC’s charges in these actions include charges based on issuer negligence (versus the “scienter” standard of knowingly or recklessly… Continue Reading

Mintz Levin to Conduct Webinar on SEC Enforcement and Self-Reporting Initiatives Relating to Municipal Bond Issuers and Underwriters

Posted in Disclosure

As indicated in the adjacent blog posts, the SEC is increasing its enforcement presence in the municipal bond market, including enforcement and self-reporting initiatives relating to disclosures about an issuer’s historic compliance with Rule 15c2-12 continuing disclosure agreement obligations.  Mintz Levin is hosting a webinar to review these developments and the conundrums the self-reporting initiative… Continue Reading

SEC Enforcement Staff Continues Sweep of Financially Distressed Municipal Bond Issuers

Posted in Disclosure

For an analysis of the SEC Enforcement Staff’s recent announcement that it is one year into a general sweep of financially distressed municipal bond issuers and that it has commenced formal investigations against some of these issuers, please view the post on our securities litigation and compliance blog titled, “SEC Enforcement Staff’s Investigations of Financially… Continue Reading

Legislative Trial Balloon for Puerto Rico Public Corporation Insolvency Process Attracts Bondholder Attention

Posted in Bankruptcy, State Law, Workouts

By LEN WEISER-VARON and BILL KANNEL Last Tuesday, Puerto Rico sold its much-ballyhooed $3.5 billion in non-investment grade general obligation bonds.  Two days later, two legislators in Puerto Rico’s Senate filed a bill which, if enacted, would permit insolvency filings by Puerto Rico’s public corporations in Puerto Rico’s territorial trial court.  The juxtaposition of the two… Continue Reading

Puerto Rico Senate Not in a New York State of Mind?

Posted in State Law

By LEN WEISER-VARON and BILL KANNEL As reported by the Wall Street Journal today and by other sources, the authorizing legislation for Puerto Rico’s much anticipated $3.5 billion non investment grade general obligation issue has become hung up in Puerto Rico’s Senate over language included in the bill passed by the territory’s House of Representatives… Continue Reading

Puerto Rico Bondholders Await Contract Impairment Ruling in Teacher Pension Reform Litigation

Posted in Uncategorized

By LEN WEISER-VARON and BILL KANNEL We previously discussed the Puerto Rico Supreme Court’s decision in the Hernandez case, in which by a 5-4 vote the court upheld the constitutionality under federal and Puerto Rico law of pension reform legislation affecting public sector employees, holding that though such legislation substantially impairs contract rights, the measures are… Continue Reading

Puerto Rico Supreme Court’s Deference to Legislature’s Determinations: A Double-Edged Sword for Puerto Rico Bondholders?

Posted in State Law

By LEN WEISER-VARON and BILL KANNEL The Government Development Bank for Puerto Rico (GDB) hosted an unusual public conference call on October 31 to respond to legal questions raised by investors in bonds issued by the Puerto Rico Sales Tax Financing Corporation, better known by its Spanish acronym, COFINA.  During the one-hour call (which is… Continue Reading

IRS Announces Closing Agreement Process for At-Risk Student Loan Bonds

Posted in Tax/arbitrage

The IRS has announced the procedures, and settlement cost methodology, for issuers seeking to preserve the tax-exemption of those student loan bonds that are at risk of being declared taxable due to the issuer’s attempted compliance with arbitrage restrictions using a loan-swapping technique that the IRS has determined is ineffective.  The closing agreement arrangements, which are… Continue Reading