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Puerto Rico Pushes Tax Incentives for Wealthy Amid Crisis

Puerto Rico’s government is trying to convince hundreds of wealthy investors to move to the U.S. territory, hoping they could help lift it out of a deepening economic crisis, the Associated Press reported today. Officials hosted a meeting for investors yesterday to promote local tax incentives aimed at luring the wealthy. New York hedge fund billionaire John Paulson, who recently bought some of Puerto Rico’s most upscale resorts, said that solving the island’s fiscal situation is essential to encouraging more investment. Paulson declined to say how much he has invested in Puerto Rico and acknowledged that he doesn’t own any of the island’s staggering $72 billion public debt. Puerto Rico already has convinced other millionaires and billionaires to move to the island with measures approved in recent years that exempt people from taxes on any capital gains accrued after they move to the island. But critics question whether the amount of jobs created and real estate bought has been enough to boost the economy. Read more

The latest ABI podcast features ABI Resident Scholar Prof. Melissa Jacoby talking with sovereign debt experts Profs. Mitu Gulati of Duke University School of Law and Anna Gelpern of Georgetown University School of Law about Puerto Rico's spiraling financial distress. Gulati and Gelpern compare Puerto Rico's financial situation to other recent sovereign debt crises, and examine current restructuring proposals for Puerto Rico. Click here to listen. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage

Offshore Group Investment Emerges from Bankruptcy

Offshore Group Investment Ltd., (OGIL) a subsidiary of Vantage Drilling Co., has completed its prepackaged restructuring and recapitalization plan to emerge from bankruptcy and plans to change its name, the company announced on Feb. 10, the Houston Business Journal reported today. The deepwater company had filed for chapter 11 in December to reduce the $1.45 billion in debt that lenders and creditors had in OGIL. Through the plan, Vantage and OGIL eliminated more than $1.5 billion of senior secured debt and received $75 million in new exit financing. The plan had called for a debt-for-equity swap that converted $75 million of lenders' and creditors' debt into equity and a share of $750 million in senior subordinated notes. Now that the recapitalization process is complete, OGIL will change its named to Vantage Drilling International. Read more.

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt with ABI’s When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy

Hercules Offshore Considering Selling Itself

Rig contractor Hercules Offshore Inc. said that it was considering strategic options, including selling itself, three months after emerging from bankruptcy, Reuters reported today. The company filed for chapter 11 protection in August and emerged from bankruptcy in November. Hercules Offshore said the move to explore alternatives was not in response to any proposal received by the company. The company had about $514 million in cash and $450 million in total debt as of Feb. 9.

Molycorp’s Creditors Continue Battle over Loans, Restructuring

Oaktree, Molycorp Inc.’s senior lender, is battling a committee of lower-ranking creditors over the size of its loans and how best to restructure the company, Bloomberg News reported yesterday. Oaktree and Molycorp agree that loans made before and after the bankruptcy bring the amount owed to Oaktree to $514 million. Other creditors, including bondholders owed $1.4 billion, are disputing that figure. Molycorp filed for bankruptcy in June after a drop in rare-earth prices made its California mine unprofitable. The company is planning to either sell itself at an auction or, if no bids are high enough, reorganize and reduce debt by turning itself over to Oaktree. The case is In re Molycorp Inc., 15-bk-11357, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Arizona Power Plant Operator Sundevil Power Files for Bankruptcy

Sundevil Holdings Holdings LLC, which operates two gas-fired power plants in Gila Bend, Arizona filed for yesterday for chapter 11 protection, Reuters reported. The company, owned by private equity firm Wayzata Investment Partners, listed $100 million to $500 million of both assets and liabilities in its filing with the U.S. Bankruptcy Court in Wilmington, Del. The company said that it would seek court approval to borrow $45 million to support its operations during its bankruptcy.