Public Finance Corp.’s qualifying modification takes effect; will drastically reduce entity’s debt
U.S. District Court Judge Laura Taylor Swain
By THE STAR STAFF
The Puerto Rico Public Finance Corporation’s (PFC) Title VI qualifying modification has gone into effect, according to a notice from the court overseeing the entity’s debt restructuring.
U.S. District Court Judge Laura Taylor Swain, who is overseeing Puerto Rico’s bankruptcy cases, approved the qualifying modification on Dec. 30, 2022, which went into effect Jan. 12. The move puts Puerto Rico closer to resolving all of its bankruptcy proceedings.
Under the qualifying modification, the $1.5 billion PFC debt will be reduced significantly to a $13.8 million payment. The deal calls for a $47 million bond issuance from the Government Development Bank Debt Recovery Authority (GDBDRA), according to court documents, but the ability of the GDBDRA to issue debt is still under litigation.
“Please take further notice that whether the DRA Bonds, as defined in the Qualifying Modification, if any, may be issued pursuant to the applicable documents and the Qualifying Modification, including whether any such DRA Bonds may be lawfully and validly issued in accordance with applicable law as contemplated by decretal paragraph 35 of the Approval Order, shall be determined by the Court in accordance with the timeframe established by the Court,” the notice said.
Under the deal, several commonwealth public corporations will be able to remove PFC debt liabilities from their balance sheets.