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Litton Loan Servicing, L.P. v. Dennis Schubert

Summarizing by Amir Shachmurove

Aurelius Investments, LLC v. Commonwealth of Puerto Rico

The appeals court is attempting to avoid chaos despite ruling that the appointment of Puerto Rico Oversight Board members violated the Appointments Clause of the Constitution.

- Rochelle Quick Take

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Case Type:
Case Status:
Affirmed in part and Reversed in part
18-1671, 18-1746, 18-1787 (1st Circuit, Feb 15,2019) Published
The members of the PROMESA board ARE subject to the Appointments Clause so the structure of the Board as it presently exists is unconstitutional. The court ordered the constitutionally-offending portion of the statute severed, but also ordered that its mandate not issue for 90 days so that the President and Congress can fix the problem. Denial of the motions to dismiss was affirmed.
Procedural context:
Appeal from the District Court determining that the members of the Board are not subject to the Appointments Clause and denying motions to dismiss the PROMESA petitions.
Interesting decision but not about Title 11, strictly speaking. It pertains to the Puerto Rico Oversight, Management and Economic Stability Act. Because Puerto Rico is not eligible to file under Chapter 9 of Title 11, Congress created a special quasi-bankruptcy system to aid Puerto Rico in recovering from it financial woes. The issue at bar was whether the members of the board were subject to the Appointments Clause of the Constitution.
Torruella (author), Thompson and Kayatta

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