Oversight board asks for more time to file commonwealth’s revised debt restructuring plan

By The Star Staff

The Financial Oversight and Management Board for Puerto Rico is seeking from U.S. District Court Judge Laura Taylor Swain additional time to file a revised restructuring plan for the commonwealth’s debt citing the global pandemic and the general election.

It is the seventh time the oversight board has sought a delay in the approval by the court of a revised debt deal since March, when the island government declared a lockdown due to the coronavirus pandemic. The board’s status report was filed Sunday.

The petition means the restructuring of the commonwealth debt and Puerto Rico’s possible bankruptcy exit have been pushed back to 2021. The oversight board asked Swain that it be permitted to provide the court with an updated status report on the board’s position on the matter on or before Dec. 4, prior to the scheduled Dec. 9 omnibus hearing.

It comes after the designation of board member David Skeel as the new oversight board president, and President Trump’s appointment to the board of Justin Peterson, who said he is eager to get the island out of bankruptcy.

The status report notes that the oversight board and the government have continued to collaborate and to take steps to deal with the COVID-19 emergency, while also slowly reopening critical governmental functions and businesses as appropriate.

The oversight board said it needs additional time to negotiate a revised plan of adjustment to take into account the impact of COVID-19, adding that it is still hurricane season in the U.S. territory until next month. Puerto Rico will also elect a new governor next month when voters choose among six candidates.

“During the intervening period, much focus has been placed on the gubernatorial election process, with candidates stating their respective visions for the best path forward for the Commonwealth and the restructuring of the Commonwealth’s indebtedness,” the oversight board wrote. “At the same time, the Oversight Board is working with Governor Wanda Vázquez [Garced] to address such restructuring and the needs of the commonwealth to reach and gain access to the capital markets.”

After filing a proposed plan support agreement in February to restructure the debt, the oversight board had to return to the negotiating table to reach a new deal to address the effects of the pandemic. In August, the board unveiled a draft of a new debt deal.

“Notwithstanding such disclosure and what some unrelated parties have asserted are differences unable to be overcome, the Oversight Board and its advisors continue to engage in active dialogue with individual creditors and their respective advisors, both those party to the Plan Support Agreement as well as other notable parties in interest,” the oversight board said.

While some creditors have asked the court to impose deadlines on the approval of a debt deal, the oversight board says it is premature.

The board also reported that it may have to draft a new fiscal plan, even though it has already certified one, because its assumptions continue to be tested by the pandemic.

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