On May 3, 2017, the Financial Oversight and Management Board for Puerto Rico (“FOMB”), at the request of then-Governor Rosselló Nevares, commenced a Title III case for the Commonwealth of Puerto Rico (the “Commonwealth”) by filing a petition for relief pursuant to Section 304(a) of PROMESA, 48 U.S.C. § 2164(a), in the United States District Court for the District of Puerto Rico.
On January 18, 2022, the Title III Court entered its Findings of Fact and Conclusions of Law and the order (the “Confirmation Order”) confirming the Plan of Adjustment (the “Plan”) for (i) the Commonwealth, (ii) the Employees Retirement System of the Government of the Commonwealth of Puerto Rico; and (iii) the Puerto Rico Public Buildings Authority. The Plan became effective on March 15, 2022 (the “Effective Date”). As of the Effective Date, the Plan reduced the Commonwealth’s total funded debt obligations from approximately $34.3 billion of prepetition debt to approximately $7.4 billion, representing a total debt reduction of 78%. This debt reduction reduced the Commonwealth’s maximum annual debt service (inclusive of COFINA debt service) from approximately $4.2 billion to $1.15 billion, representing a total debt service reduction of 73%. Also as of the Effective Date, all of the legacy Commonwealth general obligation bonds, and all of the Commonwealth obligations and guarantees related thereto were discharged. In addition, all Commonwealth laws that required the transfer of funds from the Commonwealth to other entities are deemed preempted, and the Commonwealth has no obligation to transfer additional amounts pursuant to those laws. Importantly, effectuating the Plan provides a path for Puerto Rico to access the credit markets and develop balanced annual budgets. For a detailed overview of the Plan of Adjustment, here.
The docket of the Commonwealth’s Title III proceeding can be accessed for free by clicking here.
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