Pinto Lugo v. Commw. of Puerto Rico

          United States Court of Appeals
For the First Circuit
No. 19-1181
IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO HIGHWAYS AND TRANSPORTATION
AUTHORITY; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC
POWER AUTHORITY (PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT
BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO
SALES TAX FINANCING CORPORATION, a/k/a Cofina; THE FINANCIAL
OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE EMPLOYEES RETIREMENT SYSTEM OF THE
GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO,
Debtors.
RENÉ PINTO-LUGO; MOVIMIENTO DE CONCERTACIÓN CIUDADANA INC.,
(VAMOS); UNIÓN DE EMPLEADOS DE OFICINA Y PROFESIONALES DE LA
AUTORIDAD DE EDIFICIOS PÚBLICOS, (UEOGAEP); UNIÓN INSULAR DE
TRABAJADORES INDUSTRIALES Y CONSTRUCCIONES ELECTRICAS INC.,
(UITICE); UNIÓN INDEPENDIENTE DE EMPLEADOS DE LA AUTORIDAD DE
ACUEDUCTOS Y ALCANTARILLADOS, (UIA); UNIÓN DE EMPLEADOS DE
OFICINA COMERCIO Y RAMAS ANEXAS, PUERTOS, (UEOCRA); UNIÓN DE
EMPLEADOS PROFESIONALES INDEPENDIENTES, (UEPI); UNIÓN NACIONAL
DE EDUCADORES Y TRABAJADORES DE LA EDUCACIÓN, (UNETE);
ASOCIACIÓN DE INSPECTORES DE JUEGOS DE AZAR, (AIJA); MANUEL
NATAL ALBELO,
Movants, Appellants,
v.
THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF
PUERTO RICO; THE FINANCIAL OVERSIGHT AND MANAGEMENT
BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO
RICO SALES TAX FINANCING CORPORATION, a/k/a Cofina,
Debtors, Appellees,
PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY,
Movant, Appellee,
ARISTEIA CAPITAL, LLC; CANYON CAPITAL ADVISORS, LLC; GOLDEN TREE
ASSET MANAGEMENT LP; OLD BELLOWS PARTNERS LLP; SCOGGIN
MANAGEMENT LP; TACONIC CAPITAL ADVISORS, L.P.; TILDEN PARK
CAPITAL MANAGEMENT LP; WHITEBOX ADVISORS LLC,
Intervenors.
No. 19-1182
IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO HIGHWAYS AND TRANSPORTATION
AUTHORITY; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC
POWER AUTHORITY (PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT
BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO
SALES TAX FINANCING CORPORATION, a/k/a Cofina; THE FINANCIAL
OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE EMPLOYEES RETIREMENT SYSTEM OF THE
GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO,
Debtors.
MARK ELLIOTT; LAWRENCE B. DVORES; PETER C. HEIN,
Movants, Appellants,
v.
THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF
PUERTO RICO; THE FINANCIAL OVERSIGHT AND MANAGEMENT
BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO
RICO SALES TAX FINANCING CORPORATION, a/k/a Cofina,
Debtors, Appellees,
PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY,
Movant, Appellee,
ARISTEIA CAPITAL, LLC; CANYON CAPITAL ADVISORS, LLC; GOLDEN TREE
ASSET MANAGEMENT LP; OLD BELLOWS PARTNERS LLP; SCOGGIN
MANAGEMENT LP; TACONIC CAPITAL ADVISORS, L.P.; TILDEN PARK
CAPITAL MANAGEMENT LP; WHITEBOX ADVISORS LLC,
Intervenors.
No. 19-1960
IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO
RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE
FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE PUERTO RICO HIGHWAYS AND TRANSPORTATION
AUTHORITY; THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC
POWER AUTHORITY (PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT
BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO RICO
SALES TAX FINANCING CORPORATION, a/k/a Cofina; THE FINANCIAL
OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS
REPRESENTATIVE FOR THE EMPLOYEES RETIREMENT SYSTEM OF THE
GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO,
Debtors.
PETER C. HEIN,
Movant, Appellant,
v.
THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR
PUERTO RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF
PUERTO RICO; THE FINANCIAL OVERSIGHT AND MANAGEMENT
BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE PUERTO
RICO SALES TAX FINANCING CORPORATION, a/k/a Cofina,
Debtors, Appellees,
PUERTO RICO FISCAL AGENCY AND FINANCIAL ADVISORY AUTHORITY,
Movant, Appellee.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Laura Taylor Swain,* U.S. District Judge]
Before
Howard, Chief Judge.
Torruella** and Kayatta, Circuit Judges.
Roberto O. Maldonado-Nieves for appellants Pinto Lugo, et.
al.
Rafael A. González Valiente for appellant Elliot.
Lawrence B. Dvores on brief for appellant Dvores.
Peter C. Hein for appellant Hein.
Martin J. Bienenstock and Hermann D. Bauer-Alvarez, with
whom Timothy W. Mungovan, John E. Roberts, Stephen L. Ratner,
Brian S. Rosen, Mark D. Harris, Jeffrey W. Levitan, Lucas
Kowalczyk, Shiloh A. Rainwater, Michael A. Firestein, Lary Alan
Rappaport, and Proskauer Rose LLP, were on brief for appellee
Financial Oversight and Management Board for Puerto Rico as
representative for the Commonwealth of Puerto Rico and the
Puerto Rico Sales Tax Financing Corporation.
Peter M. Friedman, with whom John J. Rapisardi, Suzanne
Uhland, and O'Melveny & Myers LLP, were on brief for appellee
Puerto Rico Fiscal Agency and Financial Advisory Authority.
David M. Cooper, with whom Susheel Kirpalani, Quinn Emanuel
Urquhart & Sullivan, LLP, Rafael Escalera, Sylvia M. Arizmendi,
Carlos R. Rivera-Ortiz, and Reichard & Escalera LLC, were on brief
for intervenors.
February 8, 2021
*    Of the Southern District of New York, sitting by designation.
** Judge Torruella heard oral argument in this matter and
participated in the semble, but he did not participate in the
issuance of the panel's decision.    The remaining two panelists
therefore issued the opinion pursuant to 

28 U.S.C. § 46

(d).
KAYATTA,     Circuit   Judge.      These    three    consolidated
appeals arise out of Title III debt-restructuring proceedings
brought by the Financial Oversight and Management Board for Puerto
Rico (“the Board“) on behalf of the Puerto Rico Sales Tax Financing
Corporation (COFINA) under the Puerto Rico Oversight, Management,
and Economic Stability Act (PROMESA).            

48 U.S.C. §§ 2101

–2241.
The Title III court approved a plan of adjustment proposed by the
Board (“the Plan“) resolving disputes between COFINA and the
Commonwealth of Puerto Rico and between the junior and senior
holders of COFINA's outstanding debt.         Two groups      -- the Elliott
and Pinto-Lugo groups -- objected to the Plan, variously contending
that   it   unlawfully    abrogated   their    rights    as     junior   COFINA
bondholders, that the plan confirmation procedures were unlawful,
and that the plan confirmation should not have been implemented
because the Commonwealth violated the Puerto Rico Constitution in
enacting implementing legislation.          An individual creditor, Peter
Hein, also challenged the dismissal of his proof of claim against
COFINA.     The Title III court overruled the objections to the Plan
and dismissed Hein's challenges.            No party sought to stay the
Title III court's order approving the Plan, which has been fully
implemented for nearly two years and given rise to transactions
involving billions of dollars and likely tens of thousands of
individuals. For the following reasons, we now dismiss the Elliott
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and    Pinto-Lugo   appeals    as    equitably    moot    and   we   affirm   the
dismissal of Hein's claim against COFINA.
I.
The Commonwealth of Puerto Rico consistently spent much
more than it received in taxes and other payments.                   Rather than
balance spending and revenues, it repeatedly opted to borrow more
by issuing general obligation bonds (“GO bonds“).               It did so until
limits    on   sovereign      debt    contained    in     the   Commonwealth's
Constitution substantially constrained the Commonwealth's direct
access to the credit markets.               To address the situation, the
Commonwealth in 2006 passed Act 91, establishing COFINA as a public
corporation, separate and independent from the Commonwealth.                  See
P.R. Laws Ann. tit. 13, §§ 11a–16.             COFINA had a sole purpose:
issuing non-recourse bonds.          See id. § 11a.       By the time of the
Title III petition in this case, aggregate principal and unpaid
interest in outstanding COFINA bonds totaled over $17 billion,
adding to the already very significant total of accrued public
debt in Puerto Rico, a jurisdiction of just over three million
people.
To pay the COFINA bondholders, Act 91 looked to the
Commonwealth's sales and use tax revenues (“SUT revenues“).                Under
Puerto Rico's Constitution, all “available revenues“ must first be
utilized to satisfy general public debt.                 P.R. Const. art. VI,
§ 8.      Act 91 sought to render a specified percentage of SUT
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revenues “unavailable“ by pledging that percentage to COFINA and
creating a statutory lien on future SUT revenues.             In this manner,
Act 91 set in place a potential conflict between the interests of
COFINA bondholders (who looked to the pledged SUT revenues for
their payments) and the interests of the Commonwealth and GO
bondholders (who might view Act 91 as unconstitutional to the
extent it sought to put otherwise available Commonwealth revenues
beyond the reach of Commonwealth creditors).
This tension turned into outright conflict when the
Commonwealth declared a moratorium on payments to GO bondholders.
The GO bondholders sued the Commonwealth, claiming a superior right
to the SUT revenues that the Commonwealth had pledged to COFINA.
COFINA    bondholders   intervened,    joining   a   zero-sum     contest     to
determine which entity had superior rights under Puerto Rico law
to the SUT revenues:        the Commonwealth (to pay its GO creditors),
or COFINA (to pay its bondholders).         This court eventually deemed
that lawsuit subject to PROMESA's temporary automatic stay.                 Lex
Claims, LLC v. Fin. Oversight & Mgmt. Bd., 

853 F.3d 548

 (1st Cir.
2017).    At the same time, we expressed hope that the parties would
find “a way to accommodate and balance the respective interests of
these bondholders if there is to be a consensual resolution.“               

Id. at 550

.
The   parties    were   initially   unable   to    reach   such   a
resolution.       So, in May 2017, the Board initiated proceedings
- 7 -
placing both the Commonwealth and COFINA under the umbrella of the
Title III court.       Under that umbrella, the Board caused the
Commonwealth and COFINA to pursue the resolution of their contest
over the SUT revenues on two tracks:               (1) a publicly noticed
mediation before Chief Bankruptcy Judge Barbara Houser open to all
interested parties; and (2) an adversary proceeding brought by the
Commonwealth against COFINA that would, if necessary, produce a
binding determination regarding the competing claims to the SUT
revenues.
The parties to the mediation eventually announced an
agreement   in    principle   resolving    their    primary     disagreements
subject to several conditions, most notably court approval.                     In
rough terms, they split the loaf of disputed SUT revenues, with
53.65%   allocated   to   COFINA   and    the   rest   to    remain    with    the
Commonwealth.      The Board and the parties to the agreement all
agreed that, given the amount of uncertainty in the ownership of
those revenues, the large stakes, and the substantial risks of a
winner-take-all decision, this split was a fair and reasonable
resolution of the dispute.       In practical terms, it would seem that
COFINA and the Commonwealth each determined that it had a roughly
even chance of getting either 100% of the challenged SUT revenues,
or 0%.
Mediation also secured a proposed deal among senior and
junior   COFINA   bondholders,     the   overwhelming       majority   of     whom
- 8 -
ultimately voted to support the COFINA-Commonwealth resolution and
to resolve their own competing claims to the payments that a
reorganized COFINA would make going forward.       With these tentative
agreements in place, the Board (on behalf of the Commonwealth) and
COFINA   entered     into   a   formal    settlement   agreement   (“the
Settlement“) memorializing these terms.         That Settlement formed
the basis of the Plan.
As a     condition precedent to implementing the Settlement
and the Plan, the Commonwealth was required to pass new bond
legislation to reorganize COFINA, to allocate to COFINA the now-
more-limited amount of SUT revenues, and to authorize COFINA to
issue restructured bonds backed by a statutory lien on the SUT
revenues belonging to COFINA.      On the penultimate day of the 2018
legislative session, this new bond legislation was brought to the
floor of the Puerto Rico House of Representatives for a vote.         A
representative from the minority party, Manuel Natal Albelo, stood
to oppose the bill.         According to the Pinto-Lugo appellants,
instead of allowing him to speak, the president of the House
“ignored“ him and “den[ied] [him] the opportunity to participate
in the debate.“       Several other members of the house allegedly
“mocked“ him.    The bill was then passed along party lines in both
chambers of the Puerto Rico legislature and signed into law by the
governor on November 15, 2018, becoming known as Act 241.
- 9 -
The Pinto-Lugo appellants thereupon filed a complaint in
a   Commonwealth          court,      asserting       that        the        treatment       of
Representative Natal Albelo violated both Puerto Rico legislative
rules and his rights under the Puerto Rico Constitution.                                    The
complaint asked the court to declare Act 241 null and void due to
those alleged deprivations.            It also asserted that the act itself
(and   its     predecessor,          Act 91)        violated       the        Puerto       Rico
Constitution,        particularly          the   limitations            on    Commonwealth
borrowing imposed by Article VI, Sections 2 and 7.                           On January 14,
2019, the Board removed that proceeding to the Title III court.
By agreement of the parties, further action in that proceeding was
stayed pending the adjudication of this appeal.
After    a    series     of    amendments       to    the       Plan    and    its
accompanying       disclosure       statement,       on   November 29,           2018,      the
Title III court entered an order approving both the disclosures
and the procedures for approving the Plan.                          Those procedures
required that all objections to the Plan be filed by January 2,
2019, with creditor votes to accept or reject the Plan due by
January 8, 2019.
The    Elliott     and    Pinto-Lugo         objectors          filed     timely
objections to the Plan.            Hein, one of the Elliot objectors, also
sought to pursue an individual proof of claim against COFINA.
As grounds for their objection to approval of the Plan,
the Pinto-Lugo objectors raised the arguments advanced in their
- 10 -
suit       against    the    Commonwealth,     challenging    the    lawfulness   of
Acts 91 and 241 and arguing that Plan approval would be futile
should they prevail on their claims.                   The Elliott objectors cast
their net more broadly.             As holders of junior COFINA bonds, they
received about fifty-five cents on the dollar in new COFINA bonds
relative      to     the    par   value   of   their    original    bonds.   Having
purchased their bonds prior to PROMESA's enactment, they argued
that their asserted liens on the pledged SUT revenues represented
a property interest that could not be retroactively impaired, so
the Settlement, the Plan, and/or the new bond legislation amounted
to a taking for which they have not received just compensation.1
See United States v. Sec. Indus. Bank, 

459 U.S. 70

 (1982).                     They
made a similar argument that the asserted impairment of their bonds
violates the Contracts Clause of the United States Constitution.
Separately, they also challenged a feature of the Plan allowing
on-island bondholders to elect to receive taxable bonds in exchange
for different interest rates as violating the Equal Protection,
Privileges and Immunities, and dormant Commerce Clauses of the
United States Constitution.               They also claimed that because this
election was integral to obtaining creditor approval of the Plan
(all who made this election were put into a different class and
1Relatedly, they asserted that this retroactive impairment
violates due process and that PROMESA more generally violates the
Bankruptcy Clause.
- 11 -
automatically deemed to have approved the Plan), Plan approval was
unlawful.       Finally, they challenged the confidential settlement
process and the expedited Plan approval procedures as inadequate
to protect their rights, and they asserted a few other statutory
violations,      which    they   have     repeated   on   appeal   only   in   a
perfunctory manner.
After hearing argument on January 16 and 17, 2019, the
Title III court overruled all objections to the Plan.               The court
rejected all of the Pinto-Lugo objections on their merits but found
that     the    objection    based   on     the   alleged   mistreatment       of
Representative Natal Albelo presented a nonjusticiable political
question.      The court also determined that the Settlement and Plan
approval process were conducted in good faith and in accordance
with the applicable provisions of PROMESA, satisfying due process
and all requirements of fairness and equal treatment under the
Bankruptcy Code.         And in a later, separate ruling, it dismissed
Hein's proof of claim as duplicative of an omnibus proof of claim
filed on behalf of all subordinate bondholders, including Hein.
The court entered its final approval on February 5,
2019.     None of the objectors asked the Title III court to stay
that approval pending any appeal.             The Plan was implemented on
February 12, 2019.        The first of these appeals followed six days
later.
- 12 -
II.
A.
The Board and an intervening coalition of senior COFINA
bondholders ask us to dismiss some or all of these appeals as
“equitably moot“ because the plan of reorganization has long ago
been implemented.     In so asking, they point to our decision in
Rochman v. Ne. Utils. Serv. Grp. (In re Pub. Serv. Co. of N.H.),

963 F.2d 469

, 471-73 (1st Cir. 1992), which dismissed a challenge
to a plan of reorganization as equitably moot because the requested
relief would have been inequitable or impractical in view of the
plan's consummation.
As   we   later   summarized    Rochman's   holding,   deciding
whether to reject an appeal of an order confirming a plan of
reorganization because the plan has been implemented calls for us
to consider at least three factors:         “(1) whether the appellant
'pursue[d] with diligence all available remedies to obtain a stay
of execution of the objectionable order[]' . . . ; (2) whether the
challenged plan proceeded 'to a point well beyond any practicable
appellate annulment[]' . . . ; and (3) whether providing relief
would harm innocent third parties.“       PPUC Pa. Pub. Util. Comm'n v.
Gangi, 

874 F.3d 33

, 37 (1st Cir. 2017) (emphasis in original)
(quoting In re Pub. Serv. Co. of N.H., 

963 F.2d at

473–75).           See
also United Sur. & Indem. Co. v. López-Muñoz (In re López-Muñoz),

983 F.3d 69

, 72 (1st Cir. 2020).         More generally, we pay heed to
- 13 -
the “equitable and pragmatic“ considerations that apply when any
court of equity is considering a remedy, albeit through a framework
tailored    to    the    specific    circumstances       that    apply    to   the
confirmation of plans.            Institut Pasteur v. Cambridge Biotech
Corp., 

104 F.3d 489

, 492 n.5 (1st Cir. 1997), abrogated on other
grounds as recognized by Hardemon v. City of Boston, 

144 F.3d 24

,
26 (1st Cir. 1998).        Every circuit has adopted some form of the
doctrine.    See Bruce A. Markell, The Needs of the Many: Equitable
Mootness' Pernicious Effects, 

93 Am. Bankr. L.J. 377

, 384 (2019).
And at least one even recently extended it.               See Drivetrain, LLC
v. Kozel (In re Abengoa Bioenergy Biomass of Kan., LLC), 

958 F.3d 949

, 956 (10th Cir. 2020) (extending the doctrine to Chapter 11
plans of liquidation).
B.
Before      turning     to     the   equitable       and     pragmatic
considerations to be assessed in deciding whether delay has doomed
any of these appeals, we take a step back and consider two
threshold issues raised by the appellants:               whether the Supreme
Court in Mission Product Holdings, Inc. v. Tempnology, LLC, 

139 S. Ct. 1652

, 1660 (2019) rendered the equitable mootness doctrine no
longer   valid,    and    whether    the      doctrine   is     inapplicable   to
proceedings under PROMESA.
- 14 -
1.
The Elliott objectors argue that the Court's recent
holding in Mission Product has undermined the continued viability
of the equitable mootness doctrine.          See 

id.

    Conducting an
Article III mootness inquiry as articulated in Chafin v. Chafin,

568 U.S. 165

, 172 (2013), Mission Product considered whether the
recent disbursement of all remaining cash from the debtor's estate
rendered an appeal moot because the disbursement left no remaining
assets with which to satisfy any possible judgment.        See Mission
Prod. Holdings, Inc., 

139 S. Ct. at 1660

.      The Court held that the
disbursement did not moot the appeal, explaining that a court must
dismiss an appeal as moot under Article III “only“ when it is
“impossible for a court to grant any effectual relief whatever,“

id.

 (quoting Chafin, 

568 U.S. at 172

), leaving the petitioner with
no “continuing stake in [the] dispute's outcome“ necessary to
create a “live controversy,“ 

id.

          Relief remained possible in
Mission Product because, among other things, it was at least
possible that the disbursement of the estate's cash might be
undone.   Id. at 1660-61.
Here, by contrast, there is no contention that the case
is moot under Article III. We have a live controversy: Appellants
want the Plan confirmation undone, and appellees do not. Equitable
mootness bears on how we decide that controversy, not whether we
have jurisdiction to decide it.        As we recently explained, “this
- 15 -
Circuit has long recognized that mootness is not just a matter of
jurisdiction but encompasses 'equitable considerations' as well.“
In re López-Muñoz, 983 F.3d at 72 (quoting In re Pub. Serv. Co. of
N.H., 

963 F.2d at 471

).            In this regard, the term equitable
mootness is perhaps a misnomer.              The doctrine might better be
viewed as akin to equitable laches, the notion that the passage of
time and inaction by a party can render relief inequitable.                      Cf.
In re UNR Indus., Inc., 

20 F.3d 766

, 769 (7th Cir. 1994) (banishing
“equitable mootness“ from its lexicon and asking instead “whether
it is prudent to upset the plan of reorganization at this late
date“).
It should come as no surprise that considerations of
equity play a role in reviewing challenges to the confirmation of
plans of reorganization in bankruptcy courts.                      At their core,
“bankruptcy      courts . . .    are    courts     of     equity   and   apply   the
principles and rules of equity jurisprudence.“                     Young v. United
States, 

535 U.S. 43

, 50 (2002) (internal quotation marks and
alteration omitted); see also Pepper v. Litton, 

308 U.S. 295

, 304
(1939)     (“[F]or    many    purposes,         'courts     of     bankruptcy    are
essentially courts of equity, and their proceedings inherently
proceedings in equity.'“ (quoting Local Loan Co. v. Hunt, 

292 U.S. 234

, 240 (1934))); Katchen v. Landy, 

382 U.S. 323

, 327 (1966).
One   of   the   Bankruptcy     Code's    central       provisions,      

11 U.S.C. § 105

(a),    which   grants     bankruptcy       courts    “broad    authority    to
- 16 -
'exercise     [their]     equitable   powers   --    where      necessary   or
appropriate     --   to    facilitate   the    implementation      of    other
Bankruptcy Code provisions,'“ makes clear that equity's role in
facilitating implementation of the Code survives in its present
iteration.    Ameriquest Mortg. Co. v. Nosek (In re Nosek), 

544 F.3d 34

, 43 (1st Cir. 2008) (internal quotation marks omitted) (quoting
Bessette v. Avco Fin. Servs., Inc., 

230 F.3d 439

, 444 (1st Cir.
2000)).
The entry of a plan of adjustment is inherently such an
equitable proceeding.        See Kuehner v. Irving Tr. Co., 

299 U.S. 445

, 452 (1937) (discussing how “the equitable adjustment of
creditors' claims . . . by way of reorganization, may therefore be
regulated by a bankruptcy law which impairs the obligation of the
debtor's contracts“); In re Balt. & O.R. Co., 

29 F. Supp. 608

, 628
(D.   Md.    1939)   (allowing   preferential       treatment     for   senior
lienholders under a plan because “equity follows the law“ and it
would be “inequitable to fail to recognize“ the preferential
treatment of the lien); Andrew B. Dawson, Beyond the Great Divide:
Federalism Concerns in Municipal Insolvency, 

11 Harv. L. & Pol'y Rev. 31

, 47 (2017) (discussing early practice in bankruptcy of
fashioning priority requirements for distribution plans using
principles of equity).       And nothing about the codification of the
factors a court must consider when confirming a reorganization
plan disturbs this underlying equitable nature.              See 11 U.S.C.
- 17 -
§ 1129(b)    (requiring     that    a     plan   of    adjustment     that    leaves
objectors'   claims      impaired    be    “fair      and   equitable“);     Aurelia
Chaudhury et. al., Junk Cities: Resolving Insolvency Crises in
Overlapping Municipalities, 

107 Calif. L. Rev. 459

, 517 (2019)
(“[C]ourts [in municipal bankruptcies] have engaged in somewhat
free-form equitable balancing, explicitly allowing municipalities
to consider all sorts of policy considerations in devising plans
of adjustment.“).     One need only look to how a reorganization plan
actually acts as a remedy -- reformation of complex contractual
relationships -- to recognize its equitable character.
We   therefore    find      the    teaching     of     Mission   Product
inapplicable     here,    where     the    issue      at    hand    turns    not     on
jurisdiction but on the merits of what is in form and substance a
request for equitable relief.
2.
As an alternative threshold objection to applying the
doctrine of equitable mootness, the Elliott objectors contend
that, even if the doctrine fits well within the context of a
commercial bankruptcy case, it does not apply in a municipal
bankruptcy proceeding, and certainly not in a Title III proceeding
under PROMESA.
As to municipal bankruptcy proceedings, every circuit
that has considered the doctrine's applicability to Chapter 9
adjustment plans has uniformly treated it as applicable.                           See,
- 18 -
e.g., Cobb v. City of Stockton (In re City of Stockton), 

909 F.3d 1256

, 1263 (9th Cir. 2018); Bennett v. Jefferson Cnty., 

899 F.3d 1240

, 1250–51 (11th Cir. 2018); Ochadleus v. City of Detroit (In
re City of Detroit), 

838 F.3d 792

, 802–05 (6th Cir. 2016).                              And
they have done so by explaining that the very nature of the relief
in a municipal bankruptcy proceeding can implicate substantial
reliance       interests      and    a     particular     need     for   finality    once
consummated.       In re City of Stockton, 909 F.3d at 1263.                     “If the
interests of finality and reliance are paramount to [application
of equitable mootness for] a Chapter 11 . . . entity . . . , then
these interests surely apply with greater force“ to a Chapter 9
plan.    In re City of Detroit, 838 F.3d at 803 (quotation omitted).
So to address whether the doctrine should apply to
adjustment plans under PROMESA, we ask the same question:                        whether
the reasons for making the doctrine applicable to Chapter 11
reorganizations         apply       with    equal    or    even    greater     force    to
adjustments under PROMESA. We believe they do. Nothing in PROMESA
undercuts the inherently equitable nature of a proceeding to
approve    a     plan    of     adjustment.          To    the     contrary,     PROMESA
incorporates      Bankruptcy         Code     Section 105       (granting      the   court
powers    as    appropriate         to     carry   out    the    Code)   and    parts    of
Section 1129(b)(1), (b)(2)(A), and (b)(2)(B) (allowing a court to
confirm a plan that is fair and equitable).                       

48 U.S.C. § 2161

(a).
PROMESA, like Chapter 9, allows the Board to modify plans only
- 19 -
prior to confirmation.        

48 U.S.C. § 2173

.          That the initial
proceedings are in a federal district court under PROMESA, with
appeals directly to this court, instead of in a bankruptcy court
with appeals in the first instance to a district court or the
bankruptcy appellate panel, is either irrelevant or cuts in favor
of the doctrine's applicability, as it removes the concern that no
Article III    court    effectively    reviewed   an    Article I   court's
decision.     See In re City of Detroit, 838 F.3d at 806 (Moore, J.,
dissenting) (noting a concern that application of the doctrine in
other types of plans may mean that the merits “will never be heard
by an Article III judge“).       Finally, the importance of treating
plans as final and worthy of reliance is certainly no less in
proceedings under PROMESA, including this one, than in Chapter 9
proceedings.    For all these reasons, we conclude that requests for
after-the-fact judicial rejections or modifications of confirmed
plans under PROMESA pose the type of equitable and pragmatic
considerations that implicate the doctrine of equitable mootness.
C.
We consider next how the Pinto-Lugo appeal fares under
the equitable mootness doctrine.           We start with the Pinto-Lugo
objectors' lack of diligence in seeking to stay implementation of
the plan until their appeals could be heard.           Repeatedly, they sat
on their hands.        Absent a waiver, a plan cannot be implemented
until fourteen days after confirmation, during which time the
- 20 -
parties may also seek a longer stay of the Plan pending appeal.
See Fed. R. Bankr. P. 3020(e).                 COFINA's plan contained such a
waiver.        The    Pinto-Lugo       objectors      nevertheless,    in   filing
objections     to    other     terms    in    the   proposed   Plan,   offered   no
complaint at all about the waiver of the automatic stay, thereby
signaling that they were prepared to see the Plan go into effect
promptly if their objections to its terms were rejected.
When the Title III court did finally approve the Plan,
the Pinto-Lugo objectors did not file a motion to stay, either in
the Title III court or this court.              Nor did they subsequently seek
to expedite the appeal.           They did not even object to requests to
extend the briefing schedule, in fact seeking an extension of the
briefing schedule themselves.                In short, they have done anything
but diligently seek to prevent third parties from building reliance
interests in the confirmation of the Plan.
The Pinto-Lugo objectors contend that they need not have
sought    a   stay   to   vindicate      their      “fundamental   constitutional
rights.“      But while the nature of the right being asserted may be
a   factor    to    consider    in     conducting     equitable    balancing,    the
presence of underlying constitutional claims does not act as a per
se bar to the applicability of the doctrine.               Bennett, 899 F.3d at
1251 (applying the mootness doctrine despite the presence of state
constitutional claims).          As the Eleventh Circuit stated aptly,
- 21 -
the mere fact that a potential or actual
violation of a constitutional right exists
does not generally excuse a party’s failure to
comply with procedural rules for assertion of
the right.    A “constitutional right, or a
right of any other sort, may be forfeited in
criminal as well as civil cases by the failure
to make timely assertion of the right before
a tribunal having jurisdiction to determine
it.“   Henderson v. United States, 

568 U.S. 266

, 271 (2013) (internal quotation marks
omitted). And we generally allow those with
constitutional rights to waive them.

Id.

   This logic applies with equal force here.
The Pinto-Lugo objectors next contend that the Board
caused the eggs to be scrambled by going forward knowing of the
threat posed to the Plan by their adversary proceeding challenging
a necessary precondition to the Plan.     But the Title III court
found the arguments advanced in support of that challenge to be
either without merit or not amenable to judicial relief.       More
importantly, once the plan proponents secured court approval to
proceed forthwith, they had no obligation to not proceed forthwith.
Rather, the burden was on the objectors to seek any stay.
The Pinto-Lugo objectors also argue that any request for
a stay would have been futile.   But they simultaneously claim to
have had good grounds for their objections to plan approval.    And
while the Title III court was undoubtedly of the view that the
objections were without merit, the Pinto-Lugo objectors offer no
evidence that the court would not have entertained some temporary
stay had one been sought.    In any event, even if it would have
- 22 -
been futile to seek a stay from the Title III court, they certainly
could have sought a stay from this court.          See id. at 1252
(discussing how the ability to expedite an appeal or seek a stay
from a reviewing court weighs against any potential futility of
doing so in the bankruptcy court).      All in all, the Pinto-Lugo
objectors' complete and repeated lack of diligence in utilizing
available mechanisms to stay implementation of the Plan cuts
sharply against them.
Nor does the record cut otherwise when we examine whether
“the challenged plan [has] proceeded to a point well beyond any
practicable appellate annulment.“   PPUC Pa. Pub. Util. Comm'n, 874
F.3d at 37.   In Rochman, we noted that
on the effective date of the reorganization
plan, all preexisting equity interests in [the
debtor]   were    exchanged   for    replacement
securities,        including       approximately
32,000,000 shares of [debtor] common stock,
notes aggregating $205,000,000, and more than
8,000,000 certificates evidencing contingent
rights to acquire, upon [the debtor's]
eventual merger with NUSC and Northeast
Utility, warrants to purchase common stock in
the emergent entity.
Approximately       $1,530,000,000       and
8,000,000 newly-issued contingent warrant
certificates     were    delivered      to    the
distributing agent on May 16, 1991, and
distributions    commenced    the    next    day.
Consequently, in accordance with the terms of
the   confirmed    plan,   more   than    100,000
individuals and entities received, or became
entitled   to   receive,    various    forms   of
securities in full satisfaction of their
[debtor] claims and interests.
- 23 -

963 F.2d at 474

.        Those “innumerable transfers,“ we held, “plainly
represent[ed] so substantial a consummation of the reorganization
plan as to render the requested appellate relief impracticable.“

Id.

The     relief        requested      in    this    case     is      no   less
impracticable.         Indeed, the Pinto-Lugo objectors describe the
result of the relief they seek as “apocalyptic.“                        Pursuant to the
Plan and new bond legislation, upon consummation of the Plan old
COFINA bonds worth over $17 billion were exchanged for reorganized
COFINA bonds worth over $12 billion.                    Those new COFINA bonds have
since changed hands tens of thousands of times on the open market
for    over   a     year,    with    many   now     held   by    strangers        to   these
proceedings.         In addition, COFINA distributed about $322 million
to    creditors,      Bank     of    New    York    Mellon      (BNYM),      as   trustee,
transferred more than $1 billion in disputed SUT revenues to the
Commonwealth and COFINA, and insurers of the old bonds have paid
holders of old bonds under the Plan. Complicating matters further,
claims have been released and all litigation arising from the
restructuring has been dismissed with prejudice.                        The Pinto-Lugo
objectors offer no practical way to undo all of this and return to
the pre-confirmation status quo.
The Pinto-Lugo objectors fare no better when we look to
see whether unwinding the Plan will harm innocent third parties
who,    due    to     the    Pinto-Lugo       objectors'        lack    of     diligence,
- 24 -
justifiably came to rely on the confirmation order.           See In re
Pub. Serv. Co. of N.H., 

963 F.2d at 475

.       Clearly that is the case
here no less than in Rochman:            “unraveling the substantially
consummated [debtor] reorganization plan would work incalculable
inequity to many thousands of innocent third parties who have
extended   credit,   settled   claims,    relinquished   collateral   and
transferred or acquired property in legitimate reliance on the
unstayed order of confirmation.“          Id.; see also In re One2One
Commc'ns, LLC, 

805 F.3d 428

, 436 (3d Cir. 2015) (recognizing as a
general matter that reversal of plan confirmation is more likely
to be inequitable in similar circumstances).       Here, moreover, the
Plan as implemented serves as important forward motion in the
Commonwealth's economic recovery.         Reversal of that momentum at
this late date would inevitably undercut confidence in the ability
of the Plan's supporters to achieve that recovery.        See In re City
of Detroit, 838 F.3d at 799.
Finally, we recognize the possibility that, in some
cases, it might be possible to modify a stand-alone component of
a plan to satisfy an idiosyncratic claim without upsetting the
interests of third parties, and without setting a precedent that
would trigger a cascade of such claims.         See Samson Energy Res.
Co. v. Semcrude, L.P. (In re Semcrude, L.P.), 

728 F.3d 314

, 321,
323-26 (3d Cir. 2013).   Here, though, we have a carefully balanced
and highly reticulated plan that offers no relevant stand-alone
- 25 -
component        that    might       be     modified    to   satisfy      the    Pinto-Lugo
objectors.         In turn, their entire argument is predicated on the
newly    issued         bonds    being       unlawful.         We    therefore     deny   as
inequitable and impractical the relief sought by the Pinto-Lugo
objectors.
D.
Like the Pinto-Lugo objectors, the Elliott objectors
failed      to     object      to    the     waiver    of    the     automatic     stay   of
confirmation, did not seek any stay pending appeal, neither sought
to expedite the appeal nor objected to requests for extension, and
in   fact    sought       to    extend       the     briefing       schedule    themselves.
Similarly, as their objections go to the heart of the Plan (the
approval of the COFINA-Commonwealth settlement), posing now a
retroactive annulment would entail the exact difficulties that we
have already discussed.                   Despite these difficulties, the Elliot
objectors offer a variety of reasons why equitable mootness is
nonetheless inapplicable to their particular appeal.
First, the Elliott objectors contend that seeking a stay
would have been futile because simple monetary relief is available.
But for reasons we will soon discuss, the simple monetary relief
they seek is not a feasible alternative remedy, so seeking a stay
would not have been an exercise in futility.
Second, the Elliott objectors contend that seeking to
expedite     the     appeal         would    have    yielded    little     benefit    after
- 26 -
consummation.     Perhaps.    But it is due to their delay that the
appeal trailed well after consummation.
Third, the Elliott objectors claim that the Board has
unclean hands and thus is not in a position to invoke equitable
mootness.     But as evidence of unclean hands the Elliott objectors
point only to the reasons why they object to the Plan.              Were this
cause   for     rendering    the    doctrine     of     equitable    mootness
inapplicable, the doctrine would never have any applicability
except in those cases in which the appeal would have failed on the
merits anyway.
Fourth, the Elliott objectors contend that they did
object to the waiver of the automatic stay period in the Plan by
objecting to the Plan “in its entirety/in all material respects.“
But such a catch-all and perfunctory objection to a multi-part,
reticulated plan raising a slew of issues does not preserve an
objection that is not even mentioned, much less developed.                Cf.
United States v. Zannino, 

895 F.2d 1

, 17 (1st Cir. 1990).             Had the
objectors had any desire to have confirmation stayed, they should
have said so.
Finally,   we   come   to   the   Elliott   objectors'    primary
argument, the idea that we can craft relief short of annulling the
entire Plan while avoiding injury to innocent third parties.              See
Prudential Ins. Co. of Am. v. SW Bos. Hotel Venture, LLC (In re SW
Bos. Hotel Venture, LLC), 

748 F.3d 393

, 403 (1st Cir. 2014)
- 27 -
(affirming the bankruptcy appellate panel's denial of dismissal
where “the bankruptcy court could fashion some form of practicable
relief, even if only partial or alternative“).            They contend that
we can order the Commonwealth to pay what they estimate to be
around $316 million to compensate all non-consenting bondholders
for the value of their original COFINA bond liens, which they argue
was reduced by the COFINA settlement in violation of the Takings
Clause and Contracts Clause, among other things.
This argument overlooks the fact that the Plan rested at
base   on   the   court's   approval    of   a    settlement    between   the
Commonwealth      and   COFINA   pursuant    to   which   the   Commonwealth
retained 46.35% of SUT revenues. The Title III court could approve
or disapprove the plan; no one explains how the Title III court
could have successfully compelled the Commonwealth to settle its
adversary proceeding against COFINA for less than the 46.35%
provided for in the approved settlement.            See 

48 U.S.C. § 2165

.
So it would seem to follow that we, too, could not “tweak“ the
plan by ordering the Commonwealth to settle for 46.35% minus
$316 million.      In short, we face an up-or-down decision -- affirm
or vacate Plan approval.         And because no one sought a stay of the
plan approval, vacating approval is precisely what would trigger
a hopeless effort to unscramble the eggs.            See In re BGI, Inc.,

772 F.3d 102

, 108 (2d Cir. 2014) (asking courts to “examine the
actual effects of the requested relief“ to see, for example, if
- 28 -
such relief would “unravel intricate transactions so as to knock
the props out from under the authorization for every transaction
that has [since] taken place“ (internal quotation marks omitted));
cf. In re City of Detroit, 838 F.3d at 799 (explaining how undoing
the compromise central to an adjustment plan is exactly the type
of scenario the doctrine of equitable mootness contemplates).   We
therefore conclude that the relief sought by the Elliott objectors
is neither equitable nor practical, and for that reason deny their
appeal.2
E.
On appeal, Hein joins the various arguments made by the
Elliott objectors, all of which we have disposed of.   As a former
holder of COFINA subordinate bonds, he also raises three issues of
his own that do not call for retroactively undoing the implemented
Plan.    First, Hein complains that the Title III court improperly
withheld from public access a transcript of a ruling incorporated
by reference into one of the court's orders. Second, he challenges
a discovery ruling denying a motion he filed seeking, post-
confirmation, to compel documents concerning communication between
2  On the question of whether their appeal should be denied
as equitably moot, the Elliott objectors include in their brief
literally dozens of other assertions to which they devote only one
or two sentences with no development and often without any citation
of relevant authority. To the extent we have not expressly listed
and addressed these contentions, we deem them waived for
insufficient development. Zannino, 

895 F.2d at 17

.
- 29 -
COFINA and the Internal Revenue Service.   Third, he contends that
the Title III court erred in dismissing his individual proof of
claim as duplicative of the trustee's claim on his behalf.
As to the ruling transcript, Hein's brief offers no
evidence at all that he ever raised with the Title III court his
complaint about the timing of transcript releases.   So we have no
idea how the court would have addressed the issue, what legal and
practical issues might be implicated, or what alternatives might
be available.   We therefore deem Hein's argument on this issue
waived.
As to Hein's discovery request, we affirm the Title III
court's denial for the reason given by that court:   The discovery
was not relevant to any pending matter Hein had before the court.
Hein's only then-pending matter before the court was COFINA's
objection to his individual proof of claim.   The only issue posed
by that objection was whether Hein's claim as a bondholder was
duplicative of the trustee's claim on his behalf.      And neither
below nor on appeal has Hein developed any cogent connection
between the requested discovery and the resolution of the objection
to his claim as duplicative.3
3  In addition, as Hein has not raised an objection under 

11 U.S.C. § 1144

 (incorporated into PROMESA through 

48 U.S.C. § 2161

), we find no basis for finding his requested discovery
materials relevant “to ensure the integrity of the proceedings“ or
otherwise.
- 30 -
That last point brings us to Hein's main contention not
disposed    of   by     our    rejection     of     the   challenges   to    Plan
confirmation:       that his proof of claim against COFINA was not
duplicative of the claim pursued on his behalf by the trustee.
The parties offer no argument concerning the standard of review we
should apply to this contention.            We will assume, arguendo, that
de novo review applies.
The BNYM, as bond trustee, filed an amended master proof
of claim on behalf of all COFINA bondholders on May 25, 2018.                That
claim was for “amounts due or becoming due on or in connection
with the Subordinate Bonds.“           That is, BNYM (like Hein) asserted
that Hein was entitled to full payment under the bond instruments.
Hein makes no claim that the master claim was disallowed in any
respect at all.       After the Plan's confirmation and pursuant to its
terms, the BNYM received a distribution on the master claim, which
it paid out to Hein pro rata for his share of junior COFINA bonds.
Hein's payment equaled less than the full amount of his claim only
because    COFINA     did     not   have   assets    sufficient   to   pay    its
bondholders in full; hence the pro rata payments.              So the question
posed is whether Hein's proof of claim was duplicative of the
master claim filed on his behalf.            As relevant here, a claim is a
“right to payment.“         

11 U.S.C. § 101

(5) (incorporated by 

48 U.S.C. § 2161

).     Hein's right to payment by COFINA was a right no
different than that of every other junior bondholder's right to be
- 31 -
paid full principal and interest on the COFINA bonds they held.
That is what he seeks on this appeal.             And that is exactly the
payment sought on his behalf by the trustee:                full payment of
principal and interest under the bonds.
Hein's proof of claim asserts no other right to payment
from COFINA.        He implicitly concedes that, had he received the
amount of money due under the bonds, he would have had no claim at
all.       Nor does he claim that he did not receive a full pro rata
payment on his claim just as did other junior bondholders. Rather,
his contention is that all junior bondholders should have received
more because COFINA would have had more funds available had the
Commonwealth not diverted SUT revenues from COFINA.                 In other
words, he is either repeating his objections to the Plan's blessing
of the Commonwealth-COFINA settlement, or he is saying that he
could      have   had   some   sort   of   independent   claim   against   the
Commonwealth for taking money that he feels should have gone to
COFINA.      To the extent Hein's claim is the former, we have already
disposed of those objections as equitably moot.4           To the extent it
4Hein faults the Title III court for declining under the
divestiture rule to consider those objections in connection with
the adjudication of his proof of claim.        We disagree.  The
Title III court appropriately deferred to our consideration of
Hein's already filed appeal with the Elliott objectors, which
raises the same issues. United States v. Brooks, 

145 F.3d 446

,
455-56 (1st Cir. 1998). On the other hand, the court was free to
decide the wholly separate issue of whether Hein had a right to
payment independent of his right under the bond instrument.
- 32 -
is the latter, it has no relevance to the adjudication of the
objection to his proof of claim against COFINA.
III.
For the foregoing reasons, we dismiss the challenges to
the Title III court's confirmation of the Plan, and we affirm the
court's orders rejecting Hein's discovery request and dismissing
his proof of claim against COFINA.
- 33 -