House Won’t Earmark Funds to Renew Restructuring Adviser Contracts
SAN JUAN – House Treasury Committee Chairman Rafael “Tatito” Hernández is cancelling, through the 2017 fiscal budget, the contracts extended to Millstein & Co. as well as Cleary Gottlieb Steen & Hamilton to advise the government on debt restructuring.
He made his remarks Tuesday as a group of credit unions announced a debt restructuring offer to the government.
Hernández said that instead of getting paid from the general fund, the advisers should be paid at the closing of the transaction as it was done in the case of AlixPartners and Chief Restructuring Officer Lisa Donahue, who handled the Puerto Rico Electric Power Authority’s $9 billion debt restructuring.
Cleary Gottlieb’s Richard Cooper and Millstein & Co.’s founder, Jim Millstein, were hired by the Government Development Bank as restructuring advisers, and they have been paid more than $65 million.The cancellation will take place starting in July with the new fiscal year.
“They should be paid as part of the savings made through the closing of the transaction as it is normally done, not for work they have not done,” he said, adding that the General Fund should not be paying their contracts.
Hernández said it is not worth it for the government to renew the advisers’ contracts because the gubernatorial candidates have already said they would not be renewing the contracts once a new administration takes office Jan. 1.