Puerto Rico and its creditors are set to meet for the first time in court on May 17 in San Juan before U.S. District Judge Laura Taylor Swain to begin restructuring the island’s debt.
The May 17 hearing, at 9:30 a.m. in federal district court, will be the first time the commonwealth, hedge funds, bond-insurance companies and mutual funds will meet since the island’s federal control board filed for a form of bankruptcy protection on May 3 to address $74 billion in debt and a $49 billion unfunded pension liability. A Puerto Rico agency that sold sales-tax bonds followed with a similar filing two days later.
At the May 17 hearing, the board will seek permission to merge the two cases and also request temporary relief from investor lawsuits. The board also wants Swain to use local bankruptcy rules in addition to the provisions of the Puerto Rico debt-relief law, known as Promesa, that Congress passed last year.
The board is also asking the judge to set deadlines for filing a creditor list. Objections to the board’s motions are due by May 15 at 3 p.m.
Puerto Rico is seeking court intervention after years of borrowing to cover budget shortfalls as its economy shrunk over the past decade. It will be the largest restructuring in the history of $3.8 trillion municipal-bond market.
The case is Financial Oversight and Management Board of Puerto Rico, 17-cv-01578, U.S. District Court, District of Puerto Rico (San Juan).
