David Scheele: “Puerto Rico will not be stable if it does not come out of bankruptcy”
head Financial Supervisory Board (JSF), David SkelHe emphasized Thursday that Puerto Rico will not enjoy “stability” if it does not complete the restructuring of its obligations, a scenario that will harm all Puerto Ricans, from retirees and public servants to other private, non-state and non-governmental components. civil sectors.
He also emphasized that the various conventions that comprise it adaptation plan The (PDA) provides Puerto Rico’s central government with the opportunity to move forward and that despite criticism and misunderstanding about the PDA, there would be no better terms for the island if the political leadership did not seize the opportunity.
“I am convinced that this is the best (amendment) plan Puerto Rico can have,” Skell said, expressing concern about the risks facing the island if the Cameral 1003 project does not become a reality.
“I thought we were on the cusp of an important victory for Puerto Rico, but if the Senate doesn’t pass this bill and at this moment, I hope it does, and I won’t give up,” Scheele said. “I will continue to fight for Puerto Rico, but the truth is that what can be achieved on a second attempt will never be good for the island. That is my fear. We could have a plan B, C or D,” said Skell, an academic expert in bankruptcy law. None of it will be useful.”
Skell’s expressions for new day Signed minutes after giving the board within 24 hours To the Senate of Puerto Rico for approval of House Bill 1003.
If the revised bill, which has already been approved by the House of Representatives, does not pass the Senate, the House will be “forced” to ask Justice Laura Taylor Swain to postpone the PDA confirmation hearing.
So far, the PDA confirmation trial is scheduled to begin on November 8. The council claims that if it doesn’t, Puerto Rico is in for a bad time and what so far seemed certain won’t happen.
There will be no certainty about the payment of pensions and the continuity of collective agreements, according to Skell, and there will be no clarity on how the government budget is managed.
But there are also other risks, according to the statement from the council, such as the possibility that bondholders or other creditors will ask the court to reject the Title III process and be paid immediately.
Only to bondholders, who haven’t earned in five years, Puerto Rico owes about $6.8 billion in unpaid principal and interest since 2016. That’s, according to official figures.
Skell’s assertions do not occur in a vacuum, but rather are a result drawn from broad American bankruptcy jurisprudence. In short, and in general, when a debtor pulls an adjustment plan close to the confirmation process, the results are always worse. If it was a corporation, it could eventually close operations, but in a case like Puerto Rico, creditors would almost certainly ask the court to pay them more.
The bankers say
As the board drew the line with Project Cameral 1003 and warned of the risks to Puerto Rico, this week two of Puerto Rico’s top private sector leaders emphasized the importance of ending bankruptcy.
Ignacio Alvarez, CEO of Popular Inc. Wednesday indicated that it is highly likely that those who oppose the PDA are “underestimating the risks of no-deal”
“It’s time for us to take this Deal (Agreement), let’s solve this problem and start focusing on the real economy.”
According to the banker, not ending debt restructuring could create more risks for sectors the legislature seeks to protect such as the University of Puerto Rico, municipalities or pension payments.
Alvarez, who expected the Senate to put an end to the 1003 room bid, said Thursday.
On his part, the CEO of Oriental Bank said, Jose Rafael FernandezIn his quarterly conversation with investors and journalists, he emphasized that Puerto Rico is experiencing the “final chapters” of the restructuring process and that completing this process will have multiple benefits.
For Fernandez, it is imperative that the Puerto Rican government begins operating out of bankruptcy and completes its restructuring so that the island can address other pressing issues such as renegotiating the debt of the Electric Power Authority (PREPA) and strengthening this key infrastructure for the island’s economic development.
The importance of the Cameral 1003 project
In explaining why approval of Project Room 1003 was needed, Skell offered two arguments.
He explained that, contrary to public perception, the governance arrangement between the Board of Directors and the United States Territory set forth in the Federal Promesa Act requires the governing body to work alongside the Puerto Rican government to reorganize its finances.
But above all, the PDA before the court considers it depends on the legislature giving its approval to the process because this is the “most appropriate” way to implement the restructuring, the academic explained.
Skell added that in the absence of such legislation, the board would have to identify another mechanism to implement the PDA.
But even if the board follows this path, there are likely to be objections to such a measure.
For example, the Restructuring Support Agreement (RSA) signed between the Board of Directors, the Legitimate Debt Coalition, and other bondholders states that legislation to enable central government debt restructuring must be approved on or before the start of the PDA confirmation hearing.
The RSA itself establishes that if the PDA is not amortized, the underwriting bond holders can claim $100 million in damages from the Puerto Rican government, one of the risks the board listed when giving the Senate a 24-hour period to perform its duty.
Skeel had hoped the Senate would play its part in this crucial process, because otherwise, everything that has been built in the past five years since the Senate to give “stability” to public services and ensure the payment of pensions can make yourself salt and water.
“I hope we don’t go down this path (of instability) because there are a lot of benefits to this plan,” Scheele said.
Tonight the President of the Senate, José Luis Dalmau noted that there are not enough votes in that room to support Project Cameral 1003.