Monday, September 24, 2018

Court could hear Puerto Rico GDB’s debt-restructuring deal in November

By on August 1, 2018

SAN JUAN – It might not be until early November that the debt restructuring deal of the insolvent Government Development Bank of Puerto Rico goes to U.S. District Court for approval as a qualified modification under Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act (Promesa), the government said.

But that is only if the Title VI proceeding is commenced by Aug. 17.

At a July 25 omnibus hearing, the court addressed the timeline for the anticipated GDB restructuring deal, the only one so far agreed upon by all creditors outside the court to resolve the dispute over the bank’s $4 billion debt.

“The Court indicated that if the Title VI Proceeding is commenced on or before August 17, 2018, the hearing to consider approval of the GDB Qualifying Modification…under Title VI will likely occur on the omnibus hearing date scheduled for November 7, 2018, and not before this date. For the avoidance of doubt, GDB is not subject to the Commonwealth Title III proceeding,” the commonwealth told the markets.

At the time, Judge Laura Taylor Swain said she planned to be on leave this month.

Lawyers for the island’s Financial Oversight and Management Board confirmed that the deal had been given the green light by the board. Under the deal, GDB’s creditors will exchange their claims for one tranche of bonds at an upfront exchange ratio of 55%. Certain municipalities will be able to get up to 55% of their excess special additional tax funds before the closing of the transaction. On July 18, the governor signed the bill that would make the restructuring deal a reality.

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