Gov’t, Bondholders File Lawsuit Over Fund Distributions

Editor’s note: The following originally appeared in the Dec. 20, 2018 – Jan. 2, 2019, issue of Caribbean Business.

The government and bondholders of the Puerto Rico Sales Tax Financing Corp. (Cofina) have asked the court for an emergency scheduling to resolve a dispute contained in Cofina’s debt-adjustment plan, which is slated to be evaluated in January by the U.S. District Court.

Resolving the dispute is essential for moving forward with the Cofina deal, a source said. Judge Laura Taylor Swain heard the request for time to resolve the dispute at the omnibus hearing which took place Wednesday, Dec. 19.

The dispute is related to Section 19.5 of the plan, which discusses delivery of distributions. The section states that distribution and deliveries to bondholders will be made to their respective addresses. However, the initial distributions of cash by the disbursing agents will be made to the Bank of New York Mellon (BNYM) as trustee of the existing securities, which will then distribute the funds.

The section says that the distribution shall not be stopped on account of lawsuits filed by Whitebox and Ambac, a provision that is at the core of the dispute. Whitebox sued BNYM in New York state court in April 2017 alleging the bank breached its duty as trustee for Cofina debt to protect senior bondholders. Whitebox said BNYM should have accelerated or frozen payouts on Cofina debt after technical defaults by Puerto Rico that began in 2015, including the government’s plan to restructure its debt. The lawsuit was stayed. A similar lawsuit was filed by Ambac Assurance Corp., which was also stayed.

The government wants the court to agree to a schedule to resolve the dispute. BNYM wants the court to determine if it should withhold any amounts of money that it had incurred to defend itself from the lawsuits.

“The Cofina plan provides for the court to determine whether BNYM is entitled to any security from Whitebox or Ambac, in the form of a distribution holdback or a bond being posted for the benefit of BNYM in connection with fees and expenses which may be incurred by BNYM in the defense of the lawsuits, and if such security is warranted,” the government said in court documents.

As a result of discussions with mediators, the Financial Oversight & Management Board as well as the lawyers for BNYM, Whitebox and Ambac, developed procedures regarding consideration of the dispute contemplated in Section 19.5 of the Cofina debt plan, to which all parties had agreed to in September 2018.

The schedule is the following: Jan. 2, 2019, will be the deadline by which BNYM must file any briefs or declarations supporting the amount the bank contends should either be withheld from distributions to Whitebox and Ambac or posted by Whitebox and Ambac pursuant to Section 19.5 of the Cofina plan. It is also the deadline on which Whitebox and Ambac must file any brief or declarations supporting their position that no amounts are required either to be withheld from their distributions.

On Jan. 9, 2019, BNYM must file any responsive papers to the Whitebox and Ambac declarations. Whitebox and Ambac must also file their responses. From Jan. 10 through Jan. 15, 2019, each party can take depositions. Then, on Jan. 16, there will be a hear-ing on the dispute. A confirmation hearing on the Cofina debt agreement is also slated for Jan. 16.

Puerto Rico government: GDB Qualifying Modification successfully completed

SAN JUAN The Puerto Rico Fiscal Agency and Financial Advisory Authority (Aafaf by its Spanish acronym) and the Government Development Bank for Puerto Rico (GDB) announced the consummation of the qualifying modification for the GDB under Title VI of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa).

The completion of the GDB’s qualifying modification marks the first successful use of the collective action procedures under Title VI of Promesa and the first Puerto Rico debt restructuring transaction closed under the law enacted for that purpose.

“The closing of the GDB debt restructuring is a historic milestone in Puerto Rico’s road to economic recovery. The closing of the qualifying modification for GDB is clear evidence that Puerto Rico has the credibility and resolve necessary to resolve its fiscal challenges. My administration is committed to continue negotiating in good faith with Puerto Rico’s creditors and pursue creative solutions that safeguard the best interests of the people of Puerto Rico,” Gov. Ricardo Rosselló said.

“The consummation of this transaction, for example, will provide combined debt service savings to the majority of Puerto Rico’s municipalities of approximately $55 million during the January 1 and July 1, 2019 payments, while also providing GDB’s diverse creditor constituency with adequate recoveries given the financial circumstances of the GDB,” Rosselló added.

AAFAF Director Christian Sobrino, the governor’s representative to the fiscal oversight board for Puerto Rico (CB file photo)

“Today’s achievement is the last step in what has been a long and difficult process that was only possible thanks to the leadership and support of Governor Rosselló and a constructive disposition to compromise by all of GDB stakeholders, including bondholders, municipalities, and our local cooperatives,” added Christian Sobrino, CEO of Aafaf and president of the GDB.

The GDB Debt Recovery Authority, a newly formed statutory public trust and government instrumentality, has issued nearly $2.6 bullion of 7.5% GDB Debt Recovery Authority Bonds (Taxable) due 2040 (DRA Bonds) to holders of participating bond claims of the GDB, with each holder receiving $550 of DRA Bonds for each $1,000 of participating bond claims of GDB they previously held. The DRA Bonds are expected to be delivered over the next few days, the release added.

Cooperatives Group Opposes GDB Deal

Editor’s note: The following originally appeared in the Oct. 4-10, 2018, issue of Caribbean Business.

Although the qualifying modification of the Government Development Bank (GDB) is seemingly a done deal, opponents continue to pop up.

One of the latest opponents is a group of cooperatives or credit unions, which are using an adversary proceeding to stop the GDB deal.

In March, the six Puerto Rico credit unions sued the island government, the Financial Oversight & Management Board (FOMB) and several other entities, including the GDB Recovery Authority, arguing “embezzlement and fraud” for selling them unsound Puerto Rico debt in a ploy to obtain their assets, and are now trying to stop the GDB restructuring. The coops—Cooperativas de Ahorro y Crédito Abraham Rosa, de Ciales, de Rincón, Vega Alta, Dr. Manuel Zeno Gandía and de Juana Díaz—say they have more than $1.45 billion in assets, nearly 140,000 members, about 35,000 non-member depositors, 384 full-time employees and branches in 15 island municipalities.

The GDB Debt Recovery Authority, which is expected to be the GDB’s successor, and its trustees, Matthew Karp, Jorge L. Padilla and David Pauker, were named as defendants in the lawsuit.

The Recovery Authority, however, says its inclusion in the lawsuit is an attempt to stop the GDB restructuring made through a qualifying modification filed in court in August. They also say the credit unions had enough time to oppose the GDB’s restructuring in court and failed to do so.

The Recovery Authority “may” become a successor to the GDB, and therefore may become “liable for the actions and omissions of the GDB,” recovery officials say.

The GDB is presently attempting to modify about $4.5 billion in debt pursuant to Title VI of Promesa. On Aug. 10, the GDB and Puerto Rico Fiscal Agency & Financial Advisory Authority filed an application seeking court approval of a qualifying modification that, among other things, would result in an exchange of all GDB securities—including all claims related to those securities—for new bonds issued by the Recovery Authority. The deal would also authorize the transfer of certain restructuring property from the GDB to the Recovery Authority.

“If the qualifying modification is approved, then plaintiffs will no longer hold claims against the GDB. In that circumstance, the Recovery Authority defendants could not possibly be liable to plaintiffs as successors to the GDB (which the Recovery Authority is not) because the court’s approval of the qualifying modification would discharge the GDB’s alleged obligations to plaintiffs. As such, there would be no basis to continue an action against the Recovery Authority defendants,” the Recovery Authority says.

On the other hand, if the qualifying modification is not approved, then the GDB will not have transferred the restructuring property to the Recovery Authority, and the Recovery Authority could never be considered a successor to the GDB, they say.

“Essentially, there would be no nexus at all between the Recovery Authority and the GDB. Either way, the complaint should be dismissed as for the Recovery Authority defendants because the Recovery Authority will never be a successor to the GDB, and even if the court approves the qualifying modification, the GDB’s alleged obligations to plaintiffs would be discharged,” they say.

The Recovery Authority said the credit unions failed to raise objections in the Title VI proceedings by the Aug. 20, 2018 deadline.

“They have therefore waived the right to object. They should not be allowed to end-run the Title VI procedures authorized by this court by attacking the qualifying modification through a Title III adversary proceeding. The complaint against the Recovery Authority defendants should be dismissed on this basis as well,” Recovery Authority officials said in court documents.


Puerto Rico legislative leaders close ranks on inventory tax

Senate President Thomas Rivera Schatz, second from right; and House Speaker Carlos “Johnny” Méndez Núñez (Courtesy)

CEIBA, Puerto Rico – The House of Representatives’ speaker and the Senate president, Carlos “Johnny” Méndez Núñez and Thomas Rivera Schatz, respectively, said Wednesday that the issue of the tax on stored inventory should be part of the discussion over tax reform.

“We can differ with the governor with a lot of respect, but the opinions I hear on the street is that with the inventory tax we cannot advance economic development. We have a meeting with the Senate team to talk and see what’s on the table, to then reach an agreement and discuss it with the Executive,” Méndez Núñez replied to questions from the press.

“I agree with the president of the [lower] chamber. This should be the opportunity to address all that has to do with the tax reform, not leave anything pending and not address anything separately,” Rivera Schatz said.

“Precisely because several colleagues from both the House and the Senate have particular opinions, which must be respected and listened to, is why I invite the governor to convene the Legislative Conference, which has not been convened in months. Five weeks left and we have the Tax Reform, the Incentives Code, the revision of the Civil Code, the fiscal adjustment that is going to have to be legislated to make the agreement with the bondholders viable, the transformation of the electrical system, among many other measures. I heard the governor wants to meet with the chair of the Senate Treasury [Committee (Migdalia Padilla)] and the chair of the House Treasury Committee [Antonio “Tony” Soto]. I think he should meet with everyone because this will not be decided by the chair of the Senate Finance Committee and the chair of the House Finance Committee,” Rivera Schatz added.

In a press conference, Gov. Ricardo Rosselló Nevares said the elimination of the tax on stored products should be discussed separately from the Tax Reform bill.

“That discussion has to be with the mayors in order to find a solution,” Rosselló Nevares said. “I think we have to find a solution, but it has to be apart from the Tax Reform,” he reiterated.

Meanwhile, Sen. Migdalia Padilla opposed the proposed elimination of the inventory tax.

“We must be very careful with the type of amendments we could make over what was already presented in principle to the [fiscal oversight] board by the governor and that now, with the amendments wanted, it gets vetoed and Tax Reform comes to halt. My position in this is that I cannot take the little that municipalities have,” Padilla said to questions from the press.

Most mayors from both parties oppose the elimination of the tax on inventories.

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

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.

Puerto Rico House passes bill to restructure GDB debt

SAN JUAN – Between long breaks, altercations between lawmakers and uneasiness over the recently approved furlough, the House of Representatives passed, with several amendments, a bill that seeks to make way for the restructuring of the Government Development Bank’s (GDB) debt.

The bill now goes to the Senate for consideration when the upper chamber’s legislators return from recess Aug. 10.

“With this measure, an agreement will be ratified with local and foreign bondholders, which was signed in past months, through Title VI of Promesa without having to go to Title III and that it be a judge who decides how the distribution will be and how much corresponds to which person,” said Rep. Antonio Soto during the measure’s presentation.

House Bill 1164, which was widely debated by several sectors and substantially amended on the fifth day of the special session, sets the parameters for a restructuring support agreement (RSA) between the bank and its creditors.

New Progressive Party Rep. Antonio Soto. (Juan J. Rodríguez / CB)

The administration-backed measure also creates the Public Entity Trust and the GDB Debt Recovery Authority, which will be responsible for taking over the bank’s assets and issuing restructuring bonds. The payment of the latter will be mainly sourced from the bank’s municipal loan portfolio, which would belong to the new entity.

Amendments for municipalities

After much discussion with the mayors of the island’s municipalities, the House presented several amendments to H.B. 1164. Among them was the removal of Article 8, which provided quasi-immunity to the officials of the new authority and the members of its board, “so there is no doubt that there are no hidden agendas here,” Soto said.

As for the $300 million in loans granted but not disbursed to municipalities, an amendment was included to ensure that future payments of principal and interest from municipalities on their loans are adjusted to their net balances.

Senate president to hear mayors out regarding Puerto Rico gov’t bank restructuring

It is further amended so that municipalities have the option of refinancing their current bonds, notes or loans with any other financial institution, without limitation. Soto explained that municipal deposits that remain frozen in the GDB will be converted into restructuring bonds, as stipulated in the RSA. The agreement gives the option to creditors, including municipalities, to choose between three tranches of new bonds.

Municipalities will have to change their claims for deposits, which total some $367 million, for bonds of the new authority created by the legislation, with cuts of 55 percent, 60 percent or 75 percent of the original value, depending on the bond, and interest rates of 7.5 percent, 5.5 percent or 3.5 percent, respectively. The municipalities will receive these interest payments every six months, the legislator said.

“Likewise, we include an amendment so the municipalities have the capacity to negotiate or sell that bond instrument when they want, to the greater benefit of the municipality. Also, we included a provision to ensure that the municipality has no limitations in being able to restructure its debt with the GDB through private institutions,” he said.

Finally, and with thte aim of safeguarding the municipalities that could be sued by contractors who did not receive payment for infrastructure works affected by the lack of GDB payments, the Legislature included a two-year stay to prevent lawsuits against the municipalities and, in turn, establish a process of negotiation between the parties.

“I want to leave something clear for record, the situation the Government Development Bank is experiencing today is not due to the municipalities of Puerto Rico. In fact, if there is any institution that owes money [to the GDB] and is paying its debts, it is the municipalities,” Soto stressed.

The lower chamber will resume its work on Thursday, Aug. 10, at 1 p.m.

Deadline set for delivery of Puerto Rico creditors list

SAN JUAN — Federal bankruptcy Judge Laura Taylor Swain issued an order Thursday authorizing deadlines for the Puerto Rico government to submit detailed information on its creditors, as part of Promesa’s Title III debt-restructuring cases for the central government and Sales Tax Financing Corp. (Cofina by its Spanish acronym).

The island’s financial control board—which represents the commonwealth government as debtor in the process—must deliver the creditor mailing matrix by June 30. Meanwhile, a full creditor list, which must include the value of their claims, must be filed by Aug. 30.

Hearing set in Peaje suit against Puerto Rico Highways Authority

On May 9, the board filed a motion in which it suggested both delivery dates to Judge Swain.

Meanwhile, she also authorized Prime Clerk to act as the solicitation, notice and claims agent for the debtor. With Thursday’s order, the board must make an advance payment of $100,000 to the firm for its services.

Earlier this week, Judge Swain halted until further notice debt payments to Cofina creditors, whose bonds are backed by a portion of the island’s sales and use tax. The money for the payment of this debt would be kept in reserve by the Bank of New York Mellon, Cofina’s trustee.

[EDITORIAL] The Leaning Tower of Lisa

editorial-philipe-schoeneLisa Donahue’s exit as the Puerto Rico Electric Power Authority’s (Prepa) Chief Restructuring Officer is a day that critics of the bankrupt utility’s restructuring could not see coming soon enough; you could hear chants of “se acabó el guiso in the Mambo Tropics,” among the naysayers. Her supporters, on the other hand—most Prepa bondholders and AlixPartners’ restructuring brigades who worked alongside her—do not share that joy.

In fact, there is consternation among some observers of the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) sweepstakes because the Ricardo Rosselló administration is taking a second crack at a deal that was hard enough to put together in the first place. Think about it—you have different creditor groups: retail bondholders, fuel-line lenders and monoline bond insurers Assured and National, which had serious concerns that a principal hit would impact liquidity.

Donahue sat at the table with these groups to hammer out one forbearance agreement after another—all told some 14 extensions to the forbearance agreement were issued. Prepa made a $415 million payment for its power revenue bonds to creditors in July 2015 using $153 million in cash from the central government’s general fund.

Then, to provide liquidity for working capital, insurers of Prepa’s power revenue bonds agreed to purchase $128 million in short-term scheduled notes to be paid in full by Dec. 15, 2015. All told, Prepa struck four similar deals across the next two years.

Lisa Donahue, AlixPartners' chief restructuring head (File)

Lisa Donahue, AlixPartners’ chief restructuring head (File)

Then there was the complexity of achieving the restructuring support agreement (RSA). No small thing to get the monoline bond insurers on board, who wanted surety in the exchange to limit exposure.

With 70% of the creditors on board, the Prepa deal is seen by Republicans on the Hill as an ideal candidate for Title VI in Promesa because it would bring in the 30% of creditors who are holdouts by making use of collective action clauses, which allow a supermajority of creditors to agree on a debt-restructuring deal that is binding on all, even the holdouts.

Although some skeptics believe there is nothing in Title VI to prevent holdouts that want a better deal from filing for injunctive relief, two bankruptcy experts who talked to Caribbean Business insist that the prospects of closing the deal under Title VI vis-à-vis the prospects of dragging out the process in litigation under Title III will lead to a final Prepa deal being struck.

So, creditors are nervous that the deal will unravel. The monoline bond insurers who were brought on board—a maneuver as messy as pulling teeth—are particularly concerned that they will be asked to share the pain. It took reduced exposure to bring monolines onboard—now, if the Rosselló administration wants another pound of flesh, the whole thing could come apart.

Had the deal Alix’s Donahue struck been closed—she would have earned her keep. Now, all that work may have all been for naught.

Here’s the thing with the oversight board—everyone is looking at the task at hand from a rhetorical standpoint and at some point, someone is going to have to roll up their sleeves and get in there, get dirty, sit down and start closing deals. Nadie quiere bañarse con el puerco en el fango—in other words, nobody wants to tangle with the pig in the mud.

Next up on Prepa’s timeline is the presentation of the utility’s fiscal plan on Feb. 21, with the RSA expiring on March 31. Let’s focus on bringing Prepa negotiations to a close—Puerto Rico can ill afford to pay more legal fees to pricey attorneys who want a second crack at a deal. And there is so much work to be done on the job creation front, which has sadly taken a backseat in this oversight charade.

Fiscal Plan to Pave Way for Creditor Talks

For Fiscal Agency & Financial Advisory Authority (FAFAA) Director Gerardo Portela, the Ricardo Rosselló administration must first advance the development of its fiscal plan before negotiating boldly with Puerto Rico’s creditors.

“Once the fiscal plan is developed and possibly certified by the fiscal oversight board, we will be able to negotiate boldly and not in a vacuum,” said Puerto Rico’s new fiscal czar during a recent interview with Caribbean Business.

For Portela, the government first needs to know its numbers to be able to negotiate such aspects as economic terms of a possible debt-restructuring agreement. According to the official, the administration intends to establish first how much money Puerto Rico will have available each year to pay its debt.

Fiscal Agency & Financial Advisory Authority (FAFAA) Director Gerardo Portela (CB/Juan J. Rodríguez)

Fiscal Agency & Financial Advisory Authority (FAFAA) Director Gerardo Portela (CB/Juan J. Rodríguez)

“After evaluating, developing and implementing the fiscal plan, we will have a better idea of the revenues we have in order to establish a sustainable debt service,” the FAFAA chief noted. However, he stressed that not having a certified fiscal plan would not impede the government from talking to its creditors, while pointing at the meetings recently held on the island.

“Hand in hand with the board,” Portela assured, the administration is working against the clock on the development of a fiscal plan that complies with the Puerto Rico Oversight, Management & Economic Stability Act (Promesa) and the requirements already stated by the board.

Moreover, the FAFAA director admitted that as of late last week, the U.S. Treasury had not held talks with the island’s fiscal agent.

Working on the plan’s baseline numbers

Portela explained that the baseline scenario already established by the board is the starting point for the administration’s fiscal plan. However, he warned: “We have our assumptions, [the board] has theirs, but right now we are in that dialogue.” While—unlike the past administration—Treasury has yet to assist the new FAFAA team in preparing the plan, those who are working on the document include the board’s consultants, McKinsey & Co., as well as the Puerto Rico government’s advisers—global law firm Dentons and consulting firm Rothschild.

“We are working diligently on our plan. It involves many calculations and financial models,” said Portela about the plan that the Rosselló administration would now have until Feb. 28 to deliver, unless the government fails to meet certain conditions levied by the board.

Among its most recent requirements, the governing body established by Promesa is calling for additional cuts in annual government spending totaling about $3 billion, while it estimates at $800 million the amount of money available each year for debt service. In response, the governor stated such recommendations are unbearable and that his administration remains open to continue working with the board on a fiscal plan that meets Promesa’s requirements.

Getting to know the creditors

On the Rosselló administration’s strategy in negotiating with Puerto Rico’s creditors, Portela said they are focused on “getting to know the creditor groups” and “evaluating the different alternatives.”

When asked about conflicts among creditors, Portela said: “At this time the government of Puerto Rico has no position regarding which credit is more senior than the other” and recalled how each group defended its respective credits during the meetings recently held on the island.

“What I can say is that we are going to develop the fiscal plan, we want it to be certified by the board and we are going to hold ‘good faith’ meetings and consensual negotiations. That is our plan,” the FAFAA chief added.


After Gov. Rosselló signed last week a new charter law for FAFAA, the island’s fiscal agent now has broader powers aimed at allowing it to make sure that every government entity complies with Promesa and the board’s requirements.

“FAFAA is a mechanism created to expedite and make possible compliance with Promesa’s requirements, and be able to implement and develop a fiscal plan. It is going to do us well, to be able to look for efficiencies or synergy in the government to lower operational costs,” the official explained.

Initially created in mid-2016 under the local moratorium legislation, FAFAA has since carried out the fiscal agency and financial advisory powers previously exercised by the Government Development Bank.

Portela also left the door open to requesting a larger budget for his entity for the next fiscal year, which begins July 1. He explained that this would depend on the tasks that it must undertake, taking into consideration the bigger role that the authority will play in the immediate future.

FAFAA currently has about 30 employees with expertise in investment, traditional banking, legal and strategic consulting, among other areas.

As for the new organizational structure, Portela explained that the Public Finances director will handle debt matters, while compliance with Promesa and the fiscal plan will be tasked to the Federal Affairs director. This official will also be the disclosing agent in charge of providing information to the markets. Meanwhile, the COO will be responsible for the relationship with the local Treasury Department and the Office of Management & Budget. The latter will comprise a committee led by FAFAA that would be in charge of managing the government’s cash flow.

Puerto Rico Gov’t, Creditor Groups Meet on the Island

SAN JUAN — The Puerto Rico government and major creditor groups will meet Wednesday and Thursday on the island, Financial Advisory & Fiscal Agency Authority (FAFAA) Executive Director Gerardo Portela told Caribbean Business.

According to the official, more than two dozen creditors that include hedge funds, monolines, mutual funds and local credit unions will kick off talks with Gov. Ricardo Rosselló’s fiscal team.

The meetings will be held in San Juan at the Minillas Government Center, where the building shared between the Government Development Bank (GDB) and FAFAA—the island’s fiscal agent in charge debt-restructuring efforts—is located.

The new government administration will seek “to get to know the bondholders and that they do the same with FAFAA. To begin initial talks with them, that they tell us their experience with the past administration, as well as disclose the different terms and conditions they have offered and whether they have changed,” Portela said.

He added that the fiscal team will gather this information and evaluate the alternatives. Moreover, nondisclosure agreements will be signed with some of the participating creditors, Portela said. For the government, its new legal adviser, Dentons, will negotiate these deals along with FAFAA’s in-house counsel.

“Once we have the fiscal plan developed and possibly certified by [Promesa’s fiscal] board, we will be able to negotiate [economic terms] and not in the void because we will have an idea of what we have available, what is the fiscal and economic reality,” said Portela, who stressed that the lack of a certified fiscal plan doesn’t prevent debt negotiations from moving forward.

“I think they go hand in hand, but yes, I understand that in order to negotiate [economic terms], you have to have an idea of your numbers. What we want is to reach a sustainable debt service level that we feel comfortable with, and we will pay,” FAFAA’s director added.

During the first day of meetings, members of the GDB ad hoc group, such as Solus, Fir Tree and Brigade, are expected to participate. Members of the Employees Retirement System ad hoc group, including Centerbridge, Oak Tree and Claren Road, are also take part in the conclave. For the ad hoc group of senior Sales Tax Financing Corp. (Cofina by its Spanish acronym) bondholders,  Whitebox and Golden Tree, are some of the members that are also expected to attend.

Bond insurer Ambac, Backyard Bondholders—which comprises local holders of several types of paper—and the island’s credit unions round out Wednesday’s agenda.

Meanwhile, representatives of Goldman Sachs, Franklin Advisers and OppenheimerFunds, as well as of monolines National and Assured, will be sitting down at the dialogue table on Thursday. Some members of the GDB ad hoc group, such as Davidson Kempner, Monarch, Aurelius and Stone Lion, are also meeting during the second day.