Puerto Rico bankruptcy proceedings to restructure an over $70 billion debt begin on Wednesday in San Juan.
Puerto Rico bankruptcy proceedings to restructure an over $70 billion debt begin on Wednesday in San Juan. The Title III debt restructuring process was created as a part of debt crisis legislation that was signed into law last summer.
"This is a historic process," notes Eric LeCompte, the Executive Director of Jubilee USA who is in San Juan to monitor the process. "The legislation and process is unique among bankruptcy processes because it can restructure all of Puerto Rico's debt and ensures that all creditors participate in the process."
LeCompte monitored the case involving Argentina versus NML Capital and organized nearly 80 development and religious organizations to file an Amicus Brief to the Supreme Court in 2014. Because Argentina was required to pay a small group of "holdout" creditors, the country was not able restructure all of its debt or return to the international capital markets for almost 15 years. LeCompte worked with Congressional leadership to create and pass legislation that would prevent so-called "vulture" funds from taking advantage of Puerto Rico as they did to Argentina. The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) was designed to prevent predatory and "holdout" behavior.
"Puerto Rico's bankruptcy process could be a model for better, more comprehensive bankruptcy processes for states and other countries," explained LeCompte who advised the United Nations General Assembly on the creation of a global bankruptcy process. "Current debt restructuring processes available for U.S. states and countries can not restructure all of their debt, but the process for Puerto Rico can."
Overseeing the hearings is Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York. The process will likely last a year and a half or more.
"In the coming years, Puerto Rico will still have a lot of obstacles to overcome but if this process is done right, Puerto Rico will have a clear path for recovery and economic growth," says LeCompte.
Jubilee USA Network is an alliance of more than 75 US organizations and 650 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA wins critical global financial reforms and won more than $130 billion in debt relief to benefit the world's poorest people.