Puerto Rico bankruptcy comes to an end as debt plan goes for approval
- The plan would reduce debt but leave pensions
- Members of the public will speak at Tuesday’s hearing
(Reuters) – The federally appointed board responsible for overseeing Puerto Rico’s bankruptcy-like process on Monday launched a multi-day hearing on its proposed plan to restructure the island’s debt and reorganize its economy .
The Financial Oversight Board seeks a ruling from U.S. District Judge Laura Taylor Swain, who sits in both Manhattan and San Juan federal courts, approving the plan after the hearing, which is currently expected to last 10 days. A favorable ruling will allow the council to conclude the island’s Title III process after more than four years of litigation and negotiations with the Commonwealth government and various creditors groups, resulting in nearly $ 1 billion in legal fees.
Under the proposed plan, Puerto Rico would reduce $ 33 billion in bonds and other debts to $ 7.4 billion. Pensions, which have been a controversial topic during the case, will not be reduced, according to the board. However, the plan freezes the defined benefit plans of current teachers and judges and transfers them to defined contribution pension plans.
While the board has made deals with bondholder groups and the Puerto Rican government to gain support for the plan, others remain opposed, including a teachers’ union and some retail bondholders. .
The plan’s approval hearing hardly took place after the board clashed with the Puerto Rican Senate over a bill to allow the issuance of new bonds, but the parties resolved this dispute at the end of October.
When debates resume on Tuesday, Swain will hear from 25 randomly selected members of the public to share their views on the proposed plan.
When the case began in May 2017, Puerto Rico had more than $ 70 billion in debt and $ 55 billion in pension liabilities.
The case is In re Commonwealth of Puerto Rico, US District Court, District of Puerto Rico, No. 17-03283.
For the Supervisory Board: Martin Bienenstock, Brian Rosen, Mark Harris, Ehud Barak, Timothy Mungovan, John Roberts and Margaret Dale of Proskauer Rose; and Hermann Bauer-Álvarez from O’Neill & Borges
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