Top Stories
Top Stories
Wires

U.S. court allows more time for Puerto Rico board reappointments

July 2 (Reuters) - A U.S. Appeals Court on Tuesday put on hold enforcement of its February ruling that found members of Puerto Rico's federally created financial oversight board were unconstitutionally appointed pending a final determination by the Supreme Court.

The order by the Boston-based 1st Circuit Court removes some of the uncertainty that had been swirling around the board and its actions by allowing time for a recently commenced confirmation process in the U.S. Senate to be completed.

The board had warned that the process of restructuring Puerto Rico's approximately $120 billion of debt and pension obligations would be thrown into chaos if the court's July 15 enforcement deadline was not extended.

The court had determined the seven appointments to the board violated the U.S. Constitution's Appointments Clause due to the lack of Senate confirmation. In May, it set the July deadline for the board to be constitutionally reappointed or replaced.

The Supreme Court last month agreed to decide whether the board's members were lawfully appointed and if decisions made by the board, including the filing of a bankruptcy-like process for the U.S. commonwealth in 2017, are invalid as a result. Oral arguments are scheduled for Oct. 15.

The appeals court declined in its February ruling to void actions taken by the board. After the Supreme Court took up the case, the board asked the appeals court for a deadline extension.

The board has completed debt restructurings for Puerto Rico's sales taxed-back debt and Government Development Bank and expects to unveil soon a proposed plan of adjustment for the island's core government debt, which includes a more than $50 billion unfunded pension liability.

Meanwhile, the Trump administration began the confirmation process on June 18 by sending nominations for the board's current members to the Senate Energy and Natural Resources Committee, which at that time said it would not hold a hearing for several weeks.

The nominations cover only the remainder of the members' terms, which all end on Aug. 30. A spokesman for the board has said the members would continue serving until they are formally replaced.

(Reporting by Karen Pierog in Chicago Additional reporting by Luis Valentin Ortiz in San Juan Editing by Matthew Lewis)