New PR board member: Define essential services, pay debt service

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New Puerto Rico Oversight Board member Justin Peterson said he expected the next fiscal plan for the island will include the payment of debt service and will define essential services.

“I would simply highlight the dysfunctionality of the [board’s] approach to date, which has been to use the fiscal plan and the lack of progress on structural reforms as an excuse to blow off creditors," Peterson told The Bond Buyer on Wednesday. "That can’t continue, and as long as I’m a member of the [board], I will use all the tools available to me, including and especially highlighting these issues publicly, to bring about change.”

The board “needs to define essential services,” Peterson tweeted Tuesday evening. “It hasn’t and that’s a big reason there has been so little progress. That’s going to change.”

Justin Peterson
New Puerto Rico Oversight Board member Justin Peterson said the next fiscal plan will allocate money for Puerto Rico's central government debt.

“The next fiscal plan will allocate money for debt service and it will define essential services,” Peterson said.

The existing fiscal plan, approved in May, has money allocated for paying the restructured Puerto Rico Sales Tax Financing Corp. (COFINA) bonds. Peterson's stament is regarding other central government bonds.

The Puerto Rico Oversight, Management, and Economic Stability Act never intended an interminable bankruptcy, or a permanent board, he said on Twitter. "Let’s make some deals, end the bankruptcy and get rid of the board!” he tweeted Tuesday.

“I have a high degree of confidence that the makeup of the [board] will embrace an agenda of finishing the restructuring,” Peterson said in an email to The Bond Buyer. “I challenge you to find somebody who wants to continue to drag this process out (other than counsel for the Unsecured Creditors Committee, who would bleed Puerto Rico for another decade in order to continue this charade, despite representing clients who haven’t been impaired…truly an outrage).”

The Bond Buyer sought a response from Luc Despins, who leads legal representation of the committee and is a partner at the Paul Hastings law firm. Despins didn’t immediately respond.

Peterson said recent statements attributed to Board Chairman David Skeel heartened him. Skeel reportedly said there is a need to complete the debt-restructuring process. “I look forward to working with him to forge a new, more productive path for the [board],” Peterson said.

Meanwhile, on Wednesday Puerto Rico bankruptcy judge Laura Taylor Swain made Feb. 10 a deadline for the board to at lease present a term sheet for a new Puerto Rico central government debt deal.

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