In a sign of the challenges that the federal board overseeing Puerto Rico's debt workout might face, the island's power authority's deal to restructure more than $8.3 billion remains mired in litigation, Bond Buyer reported yesterday. The Puerto Rico Electric Power Authority (PREPA) and its creditors have been moving toward a comprehensive restructuring since the summer of 2014.
Puerto Rico in Distress
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Puerto Rico's financial oversight board said that litigation brought by creditors against the U.S. territory should remain on pause while the island works to resolve $70 billion of public debt its government has said that it cannot pay, Reuters reported on Friday. In a brief, the seven-member board said the Puerto Rican rescue law known as PROMESA requires the lawsuits to stay frozen.
Even if Puerto Rico’s 3.4 million residents keep tightening their belts, and even if the creditors who lent it $74 billion agree to less than full repayment, the island will still “need the assistance of the federal government to bring this economic and humanitarian crisis to an end,” said Gov.
Puerto Rico bondholders have reason to be optimistic about overturning the island's debt payment moratorium in court, based on rulings by the judge handling most of the litigation, Bond Buyer reported today.
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The Financial Oversight and Management Board for Puerto Rico was created under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. The Board consists of seven members appointed by the President of the United States and one ex officio member designated by the Governor of Puerto Rico. Access information on the Board, documents, videos of meetings, calendar of events and live webcasts by clicking here.