Ballot snafu may delay Puerto Rico plan confirmation

Problems distributing ballots to potential voters on the Puerto Rico Plan of Adjustment have led to calls to push back the Oct. 4 voting deadline, and this may potentially push back the plan confirmation.

The Official Committee of Retired Employees on Thursday filed a motion to have the deadline pushed from 5 p.m., Oct. 4 to 5 p.m., Oct. 18, Atlantic Standard Time for the pensioners voting on the plan.

Judge Swain said she would rule after 5 p.m., Sept. 30 on extending the 5 p.m., Oct. 4 deadline for voting.

Later on Thursday the Unsecured Creditors Committee also called for the deadline to be extended for the unsecured creditors voting on the plan.

The retirees committee says the board says the company Prime Clerk will need at least three weeks to count the ballots. It says the confirmation hearing, currently scheduled to start Nov. 8, would not have to be pushed back by its request for additional voting time. That is because it just wants an extension for its own voters and not for everyone and because Prime Clerk could add additional workers.

In response, Puerto Rico bankruptcy Judge Laura Taylor Swain posted a briefing schedule ending at 5 p.m. on Sept. 30. She said she expected to rule on the matter without a court hearing.

The retirees’ attorneys said the Oversight Board attorneys told them the delay was “not a widespread problem” and said it would consider an extension for all creditors to Oct. 8 and not the Oct. 18 the retirees were seeking.

The company Prime Clerk was supposed to send out the Plan of Adjustment ballots and solicitation package to all voters on or before Aug. 30. The Retirees Committee conducted a poll of more than 1,000 respondents on Sept. 10 in which only 15% said they received the solicitation packages with explanations of how to vote, according to the committee’s attorneys.

Voters on the Plan of Adjustment can vote one of four ways: online, by phone, by mail sent to New York City, or by depositing ballots in one of seven mailboxes set up in Puerto Rico.

As of Sept. 17, Prime Clerk had only received 315 total votes by eligible retirees out of a total of 40,000 eligible retiree voters, the committee’s attorneys said.

Prime Clerk did not immediately respond to a request for comment.

The Retirees Committee’s attorneys said they believed the non-delivery of the solicitation packages was the result of U.S. Postal Service problems. COVID-19 has contributed to delays throughout the United States and in Puerto Rico in particular. There may be staffing shortages in Puerto Rico.

On Aug. 20 the USPS closed a sorting facility in San Juan due to structural problems. Mail is being diverted to New York and Tennessee.

At the Oversight Board’s public meeting on Sept. 17, Puerto Rico Representative Lourdes Ramos Rivera complained to the board about retirees not receiving ballots.

In response Board Executive Director Natalie Jaresko said, “If someone has not received a ballot there must be some miscommunication with the [Employees Retirement System, Teachers Retirement System, or Judicial Retirement System]. It is your pension systems that provide the names and the contacts. If someone has not yet received a ballot, I recommend you refer back to the pension system to make sure you are receiving a ballot.”

Many Puerto Rico residents hold Puerto Rico bonds. Jorge Irizarry, executive director of the Bonistas del Patio (Backyard Bondholders) group, said he hadn’t heard from people saying they had not received the solicitation package.

However, he has heard complaints that the packet is entirely too complicated. “A normal person won’t understand any of this,” Irizarry said.

People cannot find a ballot in the packet. The Disclosure Statement with attachments is 2,695 pages. It is unlikely people will read that, Irizarry said.

Most of the local holders hold bonds outside of the general obligation and Commonwealth-guaranteed Public Building Authority debt, which are being paid at about 68 cents to 80 cents on the dollar. That is because these debts were sold as tax-exempt and that did not benefit island residents who generally do not pay federal income taxes, Irizarry said.

Local holders hold about $1.3 billion of the Employees Retirement System bonds, which the plan is paying at 16-18 cents on the dollar, he said. Originally, local residents held $1 billion of the Public Finance Corp. bonds, which the plan is paying at 0 cents on the dollar.