Monday, January 17, 2022

Person of the Year – Judge Laura Taylor Swain

By on December 15, 2021

Her decisions will eventually determine, in large part, what Puerto Rico looks like over the next 20 years—and generations to come

Editor’s note: This report was first published on Dec. 16, 2021, issue of Caribbean Business.

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By Philipe Schoene Roura and José Alvarado Vega

U.S. District Court Judge Laura Taylor Swain is the Caribbean Business Person of the Year because her decisions will eventually determine, in large part, what Puerto Rico looks like over the next 20 years—and generations to come. Her cerebral cortex is occupied by vast creditor kingdoms competing for lost treasures in debt restructuring deals struck between bondholders and the island’s government under Title III of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).

In her court, she handles the White Walkers from legal firms and advisers representing various creditor constituencies vying for their share of a towering $73 billion debt load and some $55 billion in unfunded pension liabilities, in what is now the largest muni-market bankruptcy in the history of the United States.

To be certain, there is a hyper mitosis of interests—the value on the dollar of bondholder credits, pensioners clinging desperately to livelihoods lost, a Financial Oversight and Management Board (FOMB) forging a plan of adjustment (POA)—in dozens and dozens of adversary proceedings and avoidance actions that will have an enormous impact on the lives of those embroiled in the Promesa games.

Judge Swain has made defining decisions since taking the bully pulpit in 2017. Among the cases she heard, few of her decisions will be as transcendent as her certification of the POA submitted by the OBoard in November. At the time, the deal was teetering precariously on the brink of oblivion as the fiscal panel and the Legislative Assembly were at loggerheads over board-proposed pension cuts even though an initial agreement had called for increasing the proposed 8.5 percent pension cut threshold from $1,200 a month to $1,500, exempting more than 80 percent of pensioners from the cuts.

Lawmakers grandstanded—playing to populist interests in opposing cuts to pensions and other government expenditures—despite knowing deep down inside that they would eventually cave to the austerity mantra being driven by Promesa’s viceroys.

“I will be frank with you, my patience is wearing thin. I am not convinced that further delays are in the interests of Puerto Rico,” said Judge Swain, hinting at the possibility of lifting the stay on litigation afforded by the federal law. That scenario sent chills through the representatives on Capitol Hill who invested considerable political capital in passing Promesa, which has allowed lawyers to rack up more than $1 billion in legal fees to date. Throttling the stay would have signified that expensive negotiations were all for nought. 

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