CHICAGO, April 12 (Reuters) - Four banks on Friday fired back at a move by Puerto Rico’s federally created financial oversight board to force them to disclose customer information related to certain debt issued by the bankrupt U.S. commonwealth.
The board on Monday asked the U.S. District Court judge hearing the island’s bankruptcy cases to compel the banks to submit bondholder names and addresses along with related payments the bondholders received between 2013 and 2017 by an April 19 deadline.
The Bank of New York Mellon, Bank of America Corp , JP Morgan Chase Bank, and U.S. Bank objected, citing concerns over disclosing confidential customer information, as well as the cost and ability to produce a large amount of information within the tight deadline.
“The burden of this deadline is not merely excessive and unreasonable, but in fact it would be impossible to meet, as the requested data, to the extent it exists, is not easily accessible,” an attorney for JP Morgan stated in a letter to the board’s lawyers.
In a court filing, Bank of America said there was no certainty it is even the correct entity to produce information to comply with the board’s “over broad and patently burdensome requests.”
The quest for bondholder information is related to an attempt by the board and some creditor groups in the bankruptcy to have the federal court void more than $6 billion of defaulted general obligation (GO) bonds sold in 2012 and 2014 and other debt.
In an April 3 court filing asking for an extension of a statute of limitations that expires next month, the board said it could recover billions of dollars in payments made to bondholders should the disputed debt be invalidated.
U.S. District Judge Laura Taylor Swain, who has yet to rule on bond invalidation motions, will address the extension request at an April 24 hearing.
The board filed bankruptcy for the island in May 2017 to restructure about $120 billion of debt and pension obligations. But it did not seek to void the GO bonds on the basis they were issued in violation of debt limits in the Puerto Rico Constitution until January 2019, just months before the statute of limitations on bringing such actions runs out this May.
If ordered by Swain to produce bondholder information, the banks said the court should address matters such as a longer deadline, their indemnification from claims and liability arising from compliance, and reimbursement for their costs. (Reporting by Karen Pierog in Chicago and Luis Valentin Ortiz in San Juan; editing by Jonathan Oatis)