postings by John Pottow

Jevic CVSG Recommends Granting Cert

posted by John Pottow

The brief is not up on the SG's webpage yet, but they are recommending granting the petition and reversing the Third Circuit.  Hat tip to Professor Lipson or Attorneys Goldblatt et al.?  I think this now places granting odds at "moderately decent."

(Those less in the weeds: CVSG is Calls for Views of the Solicitor General.  When the Supreme Court's thinking of granting cert, it sometimes asks the Solicitor General for its views before making the decision.  The SG's brief filed this week says, "Yes, important, grant cert."  Of course, it's not dispositive, but as my old Latin Master used to say, it's better than a slap in the face with a wet haddock.  (Shout out to TPO'DB.))

Nortel Avoids (First) Appeal -- U.S. Edition

posted by John Pottow

After extensive briefing and hearings, the U.S. District Court presiding over the appeal (foreign readers: general trial judges in the U.S. federal court system sit in an appellate capacity over the specialized bankruptcy courts) from the U.S. Nortel proceedings punted this week.  More precisely, the judge, almost resignedly, acknowledged that the appellate appetite of the parties showed little sign of abatement and so has recommended that the appeal go straight to the U.S. Court of Appeals for the Third Circuit (which would hear any appeal from the District Court).  If the appellate court takes this direct appeal, which it almost certainly will, this could very well be the final stage.  Stay tuned!

Nortel Survives (First?) Appeal -- Canadian Edition

posted by John Pottow

Unlike the bankruptcy judges in Nortel, who synchronized their trials in a landmark case of cross-border insolvency cooperation, the appellate judges run at their own speed, so results will trickle in here and there.

The Canadians got through their appeal first, and the 3-0 ruling from the panel of the Ontario Court of Appeal was rightly withering of the losing appellants.  In response to the argument accusing the trial judge of applying -- instead of the correct law of property entitlements -- his own "commercial judicial moralism," the panel had this to say on his analysis:

"Based on those facts, he concluded that a pro rata order constituted the answer to the allocation issue. The fact that the answer is also fair should not detract from the force of his conclusion."

Who said Canadians can't be snarky, or at the very least passive-aggressive?

The next stage in Canada would be the Supreme Court, which requires leave to appeal, although its grant rate is higher than the U.S. Supreme Court's cert rate.  Stay tuned!

Puerto Rico: Reading the SCOTUS Tea Leaves

posted by John Pottow

I, too, join the cohort of surprised observers from this week's argument.  For me, the biggest takeaway is not so much that the Justices were engaging in textual sport, it's that they wanted to engage in those gymnastics.  That is, everyone seemed to get how unjustifiable the legal status quo is: it's clear the law is dumb, it's probable that Congress made a mistake, and so the Court had a very roll-up-their-sleeves attitude that struck me as, "What can we do to mitigate matters while being able to sleep at night that we are following an at-least-plausible reading of the text?"  The subtext to that is that they were not searching for the most natural reading of the text but the reading that did the least harm that could fix a problem.  (Surely a different colloquy would have ensued had the Late Justice Scalia been present!)

Note this is not "judicial activism" in my mind, because if it were true activism, they would just make up a doctrinal canon saying they can ignore the text when "manifestly unsound," or maybe open up the absurdity doctrine so wide you could drive a Jones Act tanker through it.  I see this as remarkably pragmatic.  We have to follow the text.  If you can get us a reading that we can live with, we'll do it.  That's why they kept pressing on what is the justification for this law.  Their lack of enthusiasm to any proffered makeweight (treat triple tax-exempt bonds differently from PR vs USVI?!) was telling.  If you're a judge, especially a Justice, I suspect you don't feel bad interpreting a law in a creative way if everyone but the self-serving litigants seems to suggest it's pointless.  In fact, you probably feel good.

All this said, don't get too excited for reversal yet.  The bondholders had some good textual counters in their briefs that didn't make oral argument.  But the irritation of the engaging Justices with the law, coupled with the simmering undercurrent of subjugation inherent in the territory's second-class status, suggests this really could be an interesting opinion.

And Now for Something Nutty on Puerto Rico

posted by John Pottow

I know nothing about the statutes delegating "home rule" authority to the Commonwealth, but do they have any reversionary clauses?  For example, if there's crisis, war, etc., can the federal government revest in any power?  Leaving aside the political unpalatability, wouldn't that leave the executive branch with a freer hand?  Building, can the President (temporarily) draft the island's residents, then issue an order taking (for fair/discounted value) any debts related to providing services for this vital military installation?  Or how about declaring it a giant national monument?  OK, feel free to go back to common sense if you want now.  (Hey, we were supposed to think creatively...)

PR: Let's start with financing...

posted by John Pottow

OK, so I start from the premise that holdouts don't want to restructure debt but others do.  Thus, the goal should be incentivize restructuring in a way that beats up on holdouts.  Could the Feds say they'll offer financing (e.g., underwrite new bonds) for people who exchange bonds/debt?

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