Judge releases Puerto Rico from bankruptcy protection


A federal judge on Tuesday approved a plan to restructure Puerto Rico’s bond debt, which had plunged the United States into the largest municipal bankruptcy in the country’s history.

Judge Laura Taylor Swain ruled in favor of the adjustment plan which took years to prepare, through arduous negotiations between the island’s Budget Oversight Council, debtors and the government.

According to council officials, the plan will reduce Puerto Rico’s debt by 80% and save the island more than $50 billion in debt repayments.

Governor of Puerto Rico Pedro PierluisiPedro Rafael PierluisiPuerto Rico Demands Reminders for Public School Students as Tourism and Entertainment Workers Puerto Rico Restrict Hours of Operation Due to Rise in Cases Puerto Rico Governor Signs Bill to Reduce half the territory’s debt PLUS said the approval of the plan “represents a big step for the economic recovery of our island”.

“The agreement, although imperfect, is very good for Puerto Rico and it protects our retirees, the university and our municipalities, which serve our people,” added Pierluisi.

Key debtors like BlackRock Financial Management Inc. and Silver Point Capital LP have backed the plan, according to a Wall Street Journal report.

The deal is a relative victory for investors, who at one point held debt valued at 21 cents on the dollar of its value before Puerto Rico’s bankruptcy process in 2016 and the hurricanes that further destabilized the economy in 2017.

The benchmark for those bonds has since risen to around 90 cents on the dollar, according to the Journal.

Swain’s resolution is also good news for the government of Puerto Rico, which will be able to use its debt service savings for public programs.

Oversight Board Chairman David Skeel and Executive Director Natalie Jaresko are expected to address the decision in detail on Tuesday evening.

“The Board of Oversight welcomes Judge Swain’s decision. We owe Judge Swain a debt of gratitude for his tireless leadership, exemplary diligence, and dedication to an equitable resolution of Puerto Rico’s debt crisis,” they said. Skeel and Jaresko said in a statement.

“Puerto Rico’s inability to pay its debt has hampered economic recovery and affected the lives of residents. Puerto Rico must continue to reform to ensure a prosperous future determined by its people,” they added.

Exiting bankruptcy proceedings – there is no legal basis for the formal bankruptcy of a US territory – will not mean that Puerto Rico can abolish the Supervisory Board.

Under the 2016 Promesa Act, which established the Council, the territory must run four consecutive annual balanced budgets.

Puerto Rico projects budget surpluses through the mid-2030s, boosted by the debt deal and federal coronavirus pandemic spending, but could still face challenges funding its pension system, which must to its current and future retirees approximately $55 billion.


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