Puerto Rico judge says full steam ahead on debt deal
Puerto Rico bankruptcy judge Laura Taylor Swain on Wednesday ordered what some participants said was an overly aggressive schedule for approving a central government debt restructuring plan.
Swain ordered the schedule at the end of the first day of an omnibus Puerto Rico bankruptcy hearing in San Juan.
At the hearing, attorneys for the Puerto Rico Oversight Board and some groups of holders of general obligation bonds supported a schedule advanced by Chief Mediator Barbara Hauser in the hearing.
However, the Puerto Rico Fiscal Agency and Financial Advisory Authority, the Unsecured Creditors Committee, bond insurer Assured Guaranty, bond insurer Ambac Assurance, Invesco, and others opposed the moves.
They asked for more time for what the Ambac lawyers said would result in various steps associated with three-lift stay motions and four motions for summary judgment in the two months leading up to a June 3 and 4 disclosure hearing.
Adding to the headache for the attorneys, sources said, was the current proposed disclosure document that is about 1,450 pages — with addendums.
In a ruling from the bench, Swain largely sided with Hauser and those parties arguing for a more rapid approach to dealing with a proposed central government debt restructuring. The board announced the proposed restructuring in mid-February.
Swain said she would set aside weekdays Oct. 21 to 31 and Nov. 1 to 6, excepting days for the omnibus hearing and for Election Day, to be used for the confirmation hearing.
She pushed back the objection deadline to the proposed disclosure statement a few days to April 24.
Hauser had earlier in the hearing called for a hearing on the diversion of money from local government instrumentalities and their revenue bonds to the central government-guaranteed bonds, called “clawbacks,” before the June 3 hearing. Swain ordered that this be done.
Swain said that a “meet and confer” meeting of parties would be modified to discuss some of the issues on revenue bonds.
For dealing with some parties’ motions alleging conflicts on interest, she offered a somewhat more generous schedule than previously had been in place.
Swain also said that parties could petition her for changes to the schedule if they had good reasons.
In other developments at Monday’s hearing, an FAFAA attorney commented on Puerto Rico’s efforts to restore electrical-generating capacity in the aftermath of several damaging earthquakes in the southwest in early January. The Puerto Rico Electric Power Authority is working to bring 550 Megawatts of temporary power generation capacity to the island. The Puerto Rico Energy Bureau will have to approve a proposal for this.
PREPA has completed a first phase assessment of damage to its Costa Sur plant. It is now working on a second phase (more detailed) assessment now, the attorney said.
Puerto Rico Oversight Board Attorney Martin Bienenstock said the board has started its annual revision of its fiscal plan. In the last 10 days the governor has submitted her proposed fiscal plan. By early April authorities and other instrumentalities are expected to submit proposed fiscal plans, he said.