As 2018 came to a close, the COFINA settlement moved closer to a conclusion as well. But it was not a conclusion that Mark Elliott of Elliott Asset Management felt was right. So, he took action. Advocating on behalf of himself and other Junior COFINA bondholders, he filed an objection with the court indicating the many reasons why the proposed plan of adjustment was categorically unjust.
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Mark’s filing with the court asks that the Plan of Adjustment be rejected in its entirety as there remained both constitutional and statutory issues to be resolved. Arguing against the abuse of Junior bondholders in favor of other creditors, the objection states, “The Plan contemplates favorable financial treatment of both [General Obligation] bondholders and Senior bondholders at the expense of Junior bondholders.”
This result was, of course, not unexpected as Junior bondholders had long been shut out of negotiations or represented by parties with clear conflicts of interest. Mark had previously raised this very issue on more than one occasion. In a September 2018 press release, Mark observed that this disparity in treatment likely arose from the fact “that the supposed junior bondholder representatives who negotiated the deal stand to gain more by selling off their junior brethren than by standing with them.” Nonetheless, the negotiations continued.
So, what is our next move in the COFINA dispute?
We’ve already made it. As a result of his latest filing with the court, Mark will testify regarding the rights of the Junior COFINA bondholders during a January 2019 hearing before Judge Swain. You can bet he’ll have plenty to say about the backroom deals that led to the creation of the current Adjustment Plan.
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