A mediation process in a restructuring of $47.5 billion of Puerto Rico debt got underway Wednesday in a federal court in downtown Manhattan.
The meeting was part of a Title III bankruptcy process for the general obligation, Puerto Rico Sales Tax Financing Corp. (COFINA), Employment Retirement System, Highways and Transportation Authority, and Puerto Rico Electric Power Authority bonds.
Some municipal analysts have hailed the mediation process as a good way to advance to a reasonable deal to restructure the debt. As of March 2017 a total of $13.3 billion of commonwealth GOs, $17.9 billion of COFINAs, $4.2 billion of HTA, $3.1 billion of ERS, and $9 billion of PREPA debt were outstanding.
Title III is a bankruptcy process authorized by last year's Puerto Rico Oversight, Management, and Economic Stability Act.
Mediation team leader Barbara Houser declared that the first meeting would be organizational and non-substantive in nature. It was closed to the public and the media.
The court allowed no more than four people to represent each creditor or creditor group.
For the general obligation and COFINA cases, Judge Laura Swain required 19 parties to attend the first session. They are not required to participate in further mediation sessions.
Among the groups required to attend were: the Ad Hoc Group of General Obligation Bondholders, Assured Guaranty Corp., the Official Committee of Retired Employees of the Commonwealth of Puerto Rico, and the Service Employees International Union.
Those who didn’t attend Wednesday’s session but who would like to attend future sessions can contact law clerk Matt Hindman at hindmanDPR@ao.uscourts.gov.
While Swain is handling the case through the United States District Court for the District of Puerto Rico, she is normally based at the United States District Court for the Southern District of New York. The Manhattan building for the latter was used for the mediation session.
The mediation in the cases is taking place separately from the court hearing process.
On June 14 Swain named five judges to run the mediation sessions.