Puerto Rico bankruptcy process begins

Dhaka,  Mon,  21 August 2017
Published : 17 May 2017, 22:20:24
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Puerto Rico bankruptcy process begins

Puerto Rico bankruptcy proceedings to restructure an over $70 billion debt began on Wednesday in San Juan, said a press release.

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, Jubilee USA's executive director who is in San Juan to monitor the process.

Jubilee USA is an alliance of more than 75 US organisations and 650 faith communities working with 50 jubilee global partners and it won more than $130 billion in debt relief to benefit the world's poorest people.

According to him, "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."

Earlier, LeCompte monitored the case involving Argentina versus NML Capital and organised nearly 80 development and religious organisations to file an amicus brief to the Supreme Court in 2014.

As Argentina was required to pay a small group of 'holdout' creditors, the country was not able to restructure all of its debt or return to the international capital markets for almost 15 years. LeCompte worked with the 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," according to LeCompte, who advised the United Nations General Assembly on the creation of a global bankruptcy process.

"Current debt restructuring processes available for US 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 US 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, it'll have a clear path for recovery and economic growth," says LeCompte.
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