Puerto Rico Bankruptcy Judge Threatens Dismissal of Case Without Plan
(Bloomberg) -- The judge overseeing Puerto Rico’s record bankruptcy threatened to consider dismissing the island’s more than four-year case if she is unable to confirm a debt restructuring plan soon, U.S. District Court Judge Laura Taylor Swain said during a hearing Monday.
The judge’s comments came in a hearing Monday to discuss an impasse that has delayed the passage of legislation that would allow for a debt-restructuring plan to move forward.
“I will be frank with you, my patience is wearing thin,” Swain said during the hearing. “I’m not convinced that further delays are at the interest of Puerto Rico.”
A dismissal of Puerto Rico’s bankruptcy would upend years of negotiations with bondholders, insurance companies and labor groups to find a way to resolve $33 billion of bonds and other obligations, including $22 billion of general obligations and debt backed by the commonwealth. It would allow investors to sue Puerto Rico for repayment of bonds as a stay on such actions would be lifted without bankruptcy protection.
The debt-cutting agreement struck with major bondholders has been imperiled by the territory’s legislature, which failed to approve a measure that would allow Puerto Rico to issue new debt to implement it. Under the deal, investors would exchange their debt for a lesser amount of new bonds, reducing what the government owes.
Puerto Rico’s legislative leaders late Sunday, however, reached an agreement that could end the stalemate.
Puerto Rico has been in bankruptcy since May 2017, after years of population loss, economic decline and borrowing to pay for operating expenses.
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