Puerto Rico governor ‘hopeful’ over judge designated to oversee bankruptcy
SAN JUAN – Gov. Ricardo Rosselló said he was “hopeful” Friday with the designation of U.S. District Judge Laura Taylor Swain to preside over the government of Puerto Rico’s bankruptcy process to restructure more than $70 billion in public debt under Title III of the federal Promesa law.
The judge from the Southern District of New York will ultimately decide how and which Puerto Rico assets will be distributed to bondholders.
“We are hopeful that federal Judge Laura Taylor Swain, from her experience in these types of cases, will be fair and help Puerto Rico so that, in an orderly way, it can recover with the mechanisms legislated by Congress,” Rosselló said in a written statement.
Swain’s designation was announced Friday by U.S. Supreme Court Chief Justice John Roberts, days after the governor asked the Financial Oversight & Management Board established by Promesa to renegotiate the island’s public debt through the federal law’s Title III instead of Title VI.
While Title III files for a type of bankruptcy and provides a court-ordered restructuring process, Title VI consisted of consensual agreements with the creditors, which were complicated when Promesa’s stay on litigation against the government ended May 1.
The decision to resolve a portion of the debt in court is the largest effort ever made by a U.S. government to shield itself from creditors. It’s unknown how long the bankruptcy-like process will take, although local government officials believe it could be resolved in four years.
Overall, Puerto Rico has $73 billion in public debt accumulated in part by previous administrations borrowing money to cover budget deficits. By comparison, the U.S. city of Detroit had less than $20 billion in debts when it filed for bankruptcy in 2013, which was the biggest U.S. municipal bankruptcy ever.
–The Associated Press contributed to this report.