Puerto Rico Health System on Life Support Two Weeks After Hurricane Maria

Puerto Rico Health System on Life Support Two Weeks After Hurricane Maria

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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October 5, 2017

 
ABI Bankruptcy Brief
 
 
 
 
NEWS AND ANALYSIS

Puerto Rico Health System on Life Support Two Weeks After Hurricane Maria

Two weeks after Hurricane Maria toppled Puerto Rico's communications towers, wrecked its electrical grid and knocked out power to water systems, medical officials said the island's health system is "on life support," USA Today reported today. "We have hospitals that are working, but eventually we are going to have to transfer patients," said Carlos Méndez, an associate administrator at the Auxilio Mutuo Hospital, one of the island’s top medical facilities, in the Hato Rey district of San Juan. Health officials yesterday in Puerto Rico toured the 1,000-bed U.S. Naval Hospital Ship Comfort as it docked in San Juan, the capital. It is the largest floating medical facility in the U.S. military and the ship will be used to help deal with the medical crisis facing this island of 3.4 million residents. Puerto Rico has 69 hospitals. The total number of hospitals operating at least partially is 64. Of those, 17 are connected to the grid. The rest are operating with generators, according to the office of Gov. Ricardo Rosselló. The island’s cellular system is still crippled, with 14 percent of antennas and 26 percent of cellular towers operating, according to the web site status.pr.
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The U.S. House Committee on Natural Resources said it will work to identify red tape and other bureaucratic hurdles to speed up Puerto Rico’s recovery and rebuilding, as the island struggles to recover from the impact of Hurricane Maria, Reuters reported. Committee Chairman Rob Bishop (R-Utah), who organized an informal roundtable yesterday for the members of the committee to discuss the situation in Puerto Rico and the U.S. Virgin Islands, said yesterday that the Federal Emergency Management Agency (FEMA) and other federal partners will also likely be engaged for years in helping Puerto Rico get back on its feet. Bishop added that an emergency response will be executed through FEMA and local officials. Bishop said under evaluation was also the question of whether to modify or give additional power to the oversight board tasked with overseeing Puerto Rico’s debt restructuring. Click here to read a committee press release.

This year’s hurricane season has become one of the most destructive in recent memory. To provide assistance to those affected and direct others in how you can help, ABI encourages you to visit our Hurricane Relief webpage.

Commentary: Trump Could Push the Justice Department Into Puerto Rico’s Debt Fight

After President Donald Trump said Puerto Rico’s debt will be wiped out, White House officials rushed to rule out any U.S. bailout of bondholders, who lent the commonwealth about $74 billion, according to a Bloomberg commentary today. But Trump, who used bankruptcy to restructure billions owed by his former businesses, has other ways to insert the federal government into one of the most complicated insolvency cases ever filed in a U.S. court. He could order the U.S. Justice Department to defend the 2016 federal law that Puerto Rico is trying to use to slash its debt and about $49 billion in pension obligations. Bondholder Aurelius Investments LLC is trying to have that law, known as PROMESA, declared unconstitutional, which would throw the restructuring into chaos, according to the commentary. But he has to move soon. The judge overseeing the Title III bankruptcy case has given the justice department a Nov. 6 deadline to decide whether to defend the constitutionality of PROMESA, or leave the job to a federal oversight board. Another option: the Justice Department becomes a party to the bankruptcy, which would give the White House the chance to directly influence a final restructuring plan of the island’s debt load and what Wall Street creditors get repaid, according to the commentary. That plan will be put together by the federal oversight board, which is responsible for prosecuting the bankruptcy case and was appointed before Trump got elected.
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Hurricanes, Earthquakes Rack Up Huge Bill for Insurers

One of the most expensive years for natural disasters on record is likely to cause widespread losses for insurance firms in upcoming quarterly earnings and shrink their capital cushions, the Wall Street Journal reported on Monday. The confluence of three major hurricanes — Harvey, Irma and Maria — and two Mexican earthquakes in recent weeks could cost the global insurance industry more than $100 billion, according to estimates. Of that natural-disaster damage bill, a large amount is expected to be borne by reinsurance companies, which provide insurance to insurers. But in the long term, the string of natural disasters could help insurers on one front if the damage costs run that high. After years of falling prices, executives say reinsurers and commercial insurers could charge customers more next time their property policies come up for renewal. The extent of damage is still unclear, especially in Puerto Rico, which was devastated by Hurricane Maria earlier this month. Two of the island’s largest insurers, Universal Group Inc. and Mapfre SA, said they are helping employees obtain such things as batteries, generators, and even food, while also handling incoming claims. Millions of Puerto Ricans currently lack many basic necessities including electricity and cellphone connectivity to file insurance claims. Early estimates put Maria’s insured losses within a wide range, between $15 billion and $85 billion. Harvey, which hit Texas in August, is expected to cost at least $10 billion for private-sector insurers, and Irma’s destruction in Florida and the Caribbean is estimated to cost at least $32 billion. U.S. property and casualty insurers and global reinsurers entered the 2017 hurricane season with a record $1.3 trillion in claims-paying capacity.
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EU Executive to Propose Gradual Introduction of EU Deposit Scheme to Win over Germany

A European deposit insurance scheme should be introduced more gradually than initially planned, the European Commission is set to propose next week, in a bid to secure German support for a plan meant to increase financial stability in the euro zone, Reuters reported. According to the draft document to be published today, the European Union executive arm will propose that the insurance scheme, known as EDIS, could initially provide only loans to support depositors of failing banks. Only in a second phase the scheme would cover losses. This phase would start only when banks have sufficiently reduced their levels of bad loans, which remain still very high in some EU countries, like Italy, although they are decreasing. Germany has long opposed the plan, fearing the money of its own banks could be called upon under the scheme to cover the payouts of deposits of banks failing elsewhere in the euro zone. Germany has therefore said it could only agree to a pan-European deposit insurance scheme, which would guarantee the payout of all deposits up to 100,000 euros in all of the euro zone, only if risks of bank failure were reduced first. This entails a significant reduction in the number of bad loans in the banking sectors of various countries and the Commission said that it would present proposals next spring to make it easier for banks to recover debt. The Commission will also propose a further development of a secondary market for bad loans, also known as non-performing loans (NPLs), so that banks can sell them.
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ABI’s International Insolvency & Restructuring Symposium on Oct. 19-20 in Dublin will feature a special keynote by Sir Ivan Rogers, the former Permanent Representative of the United Kingdom to the European Union. Be sure to register to hear his speech and lively panel discussions on top international insolvency issues.

Don't Miss the Early Bird Rate on ABI's Winter Leadership Conference in Palm Springs! Register by Tomorrow and Save $100!
The early bird rate on ABI's 29th Annual Winter Leadership Conference goes up after tomorrow. Don't miss your chance to save $100 on registration to join n beautiful Palm Springs, Calif., from Nov. 30-Dec. 2! Nine joint ABI committee sessions provided by ABI’s committees are in the lineup, along with ABI’s newest plenary trend — ABI Talks — and 13 topical sessions, providing up to 8.25/10 hours of CLE/CPE credit and 2 hours of ethics! The luncheon this year will be a celebration of ABI’s Inaugural “40 Under 40” class, and the Final Night Dinner is sure to be a “magical” evening with a jaw-dropping performance by Drew Thomas of “America’s Got Talent.” As always, the Winter Conference will also provide numerous social and fun events for networking and renewing friendships with colleagues from around the nation, all in a unique and comfortable setting. Register by tomorrow and save!

Next Consumer Commission Open Meeting to Take Place Tuesday at NCBJ

The ABI Commission on Consumer Bankruptcy will hold a public meeting of the Committee on Case Administration & the Estate during the annual conference for the National Conference of Bankruptcy Judges (NCBJ). The meeting will be October 10, 2017, from 10:45 AM – 1:00 PM PDT in the Paris Las Vegas Hotel, Versailles rooms 1-2. Conference attendees have the opportunity to make a statement with suggested reform of the consumer bankruptcy system. To find out how to participate at the open meeting, please click here.

To access the list of topics under consideration by the Commission’s committees and previous hearing statements, please click here.

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BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: CFPB Gives More Time to Reach Troubled Borrowers in Servicer Rule Revision

The Consumer Financial Protection Bureau said yesterday that it would give mortgage servicers more time to notify distressed borrowers who have asked not to be contacted about the collection of their debts, according to a recent blog post.

Don't miss next week's free abiLIVE webinar, "Too Much Information? Impact of the CFPB's Amended Mortgage Servicing Rules." Click here to register.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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