Puerto Rico Governor Says Shutdown Won’t Prevent July 1 Default
Eight days before about $2 billion in bond payments come due, Puerto Rico Governor Alejandro García Padilla reiterated today that the commonwealth will default on its general obligations even if he halted services on the island, Bloomberg News. “If I shut down the government, I will not have enough money to pay,” said García Padilla. García Padilla is in the nation’s capital lobbying for Congressional approval of a bill that would set up a framework for the commonwealth to restructure its $70 billion in debt. The Senate is supposed to take up the measure next week. The House passed the bill (H.R. 5278), which also has the support of the Obama administration. Puerto Rico owes $805 million on its general-obligations, which the island’s constitution stipulates must be paid before other expenses, on July 1. Including its agencies, the island faces a $2 billion principal and interest payment. Even limiting government operations won’t free up cash to pay creditors, the governor said.
For a summary of H.R. 5278 from the forthcoming July edition of the ABI Journal, please click here.
Houston's unfunded pension liability now stands at an estimated $5.6 billion, and it's growing, according to a Houston Chronicle editorial today. About 31 cents of each dollar Houston spends on payroll now goes to pension funds. In truth, if the city government did what it should and used actuarially determined rates, that figure would be closer to 35 percent. Houston Mayor Sylvester Turner and union leaders are negotiating, an encouraging sign after years of costly stalemate. Among the options under discussion are lower cost-of-living adjustments and higher retirement ages, according to the editorial. One option off the table for now is a reform that would move new hires to a 401(k)-style plan. Eliminating those defined-benefit pension plans is an important option to consider because pensions as they now work raise plenty of problems, according to the editorial. Read the full editorial.
Report: Foreclosure Starts Now at Pre-Crisis Levels
Black Knight Financial Services reported that foreclosure inventory continues to decrease, decreasing 3.55 percent from April to May and 29 percent year-over year, HousingWire.com reported. Foreclosure inventory in May hit below 575,000, down from 800,000 last year. That marks the lowest foreclosure inventory since the summer of 2007. May’s 62,100 foreclosure starts were 20 percent less than May 2015, and remain below pre-crisis levels, according to the report. Delinquencies increased slightly in May by just 0.36 percent, however they are still down by almost 13 percent annually.
Latest ABI Podcast Examines Intersection of Consumer Credit and Domestic Violence
Spring 2016 ABI Resident Scholar Melissa Jacoby talks with Prof. Angela K. Littwin of the University of Texas at Austin School of Law about Littwin's research on the relationship between consumer credit and domestic violence. Littwin interviewed domestic violence victims about “coerced debt,” which occurs when the abuser in a violent relationship obtains credit in the victim's name via fraud or coercion.
Commentary: In Chapter 11 Disclosure, No Firm Is Above the Rules
The retention of a professional firm in a chapter 11 case, while requiring some thoughtful and perhaps tedious work, is incredibly straightforward, according to a commentary by Perry M. Mandarino in yesterday's Wall Street Journal. There are long established standards that are intended to protect the integrity of the proceeding and form the fabric of chapter 11 cases. The successful adjudication of a bankruptcy case requires many building blocks, with process and transparency being two of the most critical. Any proffered rationale to be exempt from disclosure is just a brazen mix of slothfulness and arrogance, according to Mandarino. Claims of “we didn’t think it was relevant” or “we don’t have a database” appear insincere given technology and established regulatory compliance programs. Let the bankruptcy court decide relevance, according to Mandarino, and if systems aren’t in place to unearth potential conflicts, there is always the old-fashioned way of direct inquiry among a firm’s partners and staff.
Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!
