876 Bondholders Prevail In Vacating 2002 and 2004 Orders; Seek Receiver and Restoration of Funds

876 Bondholders, represented by Lommen Abdo, won another victory in their claims against the St. Paul Port Authority. By Order filed June 18, 2010, Ramsey County District Court Judge Teresa Warner vacated court orders issued in 2002 and 2004 that purported to approve many actions taken by the Port Authority in connection with Basic Resolution No. 876 and the 876 Bonds issued by the Port Authority.

In September 2009 the Minnesota Supreme Court found that the district court lacked jurisdiction over the 876 Bonds and further found that district court orders issued in 2007, 2004 and 2002 were void. The Minnesota Supreme Court vacated the order issued in 2007 and remanded to the district court to determine whether the 2002 and 2004 orders should be vacated. Judge Warner has now ruled those orders are vacated. The 876 Bondholders originally objected to the court’s jurisdiction and, in 2006, requested that the 2002 and 2004 orders be vacated.

In early June 2010, the 876 Bondholders commenced a new lawsuit against the Port Authority requesting appointment of a receiver for the 876 Common Bond Fund, requesting the Port Authority restore money wrongfully taken from the 876 Common Bond Fund and for other appropriate relief. In the past the Port Authority has asserted that no court could look past the 2002 and 2004 orders which approved the actions of the Port Authority. That claim is no longer available to the Port Authority and the 876 Bondholders are seeking to enforce the contractual terms of the Basic Resolution.

In the past the Port Authority has rebuffed attempts by the 876 Bondholders to engage in constructive discussions to expedite the appointment of a receiver for the 876 Common Bond Fund, restoration of funds to the 876 Common Bond Fund, and resolution of all issues. The Port Authority owes over $51 million dollars in principal on outstanding 876 Bonds and is in arrears on payments owed for both principal and interest. The Port Authority claims the 876 Common Bond Fund is insolvent, but to-date has refused to restore funds it has diverted and taken from the Fund.

Review the June 18, 2010 Order of Judge Teresa Warner.