The Jubilee Blog

Puerto Rico Bankruptcy Judge Reviews Debt Deal

January 16, 2019

Oversight Board Files for $6 Billion Debt Cancellation Washington DC - Through Thursday, the judge presiding over Puerto Rico's bankruptcy process will hear testimony about a debt deal to restructure about $17 billion of the island's $72 billion debt. The Honorable Judge Laura Taylor Swain is administering the island's Title III process, a debt restructuring process created by Congress in 2016. This week Swain is hearing testimony from stakeholders of the merits of a debt deal that Puerto Rico's COFINA creditors and oversight board agreed on. Critics of the plan argue that if the debt deal is approved, it sets up Puerto Rico for failure.

"The current agreement doesn't do enough to support sustained economic growth, reduce austerity or ensure that Puerto Rico rebuilds from last year's hurricanes," said Jubilee USA Executive Director Eric LeCompte who monitored the island's debt woes since 2015. "If this is the recipe to restructure Puerto Rico's debt, Puerto Rico will be back at the restructuring table in a few years."

This week Puerto Rico's oversight board filed a request to cancel debt to Judge Swain. $6 billion in General Obligation bond debt from 2012 and 2014 exceeded set Puerto Rico constitutional debt limits, according to the court filing.

"The move to cancel this debt is important. It should be declared null and void," stated LeCompte. "The debt violated debt limits and some hedge funds were looking to exploit this debt."

Judge Delays Ruling on Puerto Rico Debt Deal

White House Opposes Island's Food Assistance Funding

January 18, 2019

Washington DC - On Thursday, Judge Laura Taylor Swain delayed approval of a $17 billion debt deal between Puerto Rico "COFINA" creditors and the island's oversight board. Citing concerns that her ruling could alter Puerto Rico's constitution, the judge requested additional materials to review on Monday from the federally appointed oversight board.

"We are concerned that the plan under consideration doesn't cut enough debt," said Eric LeCompte who heads Jubilee USA and has monitored the island's financial situation since 2015. "I am worried that this type of plan will mean Puerto Rico will be trapped in an endless cycle of debt."

In court, opponents of the debt plan requested that Swain further delay any decision until the Internal Revenue Service can review the tax status of new bonds that are a part of the deal. The IRS can not currently assess the bonds because their doors are shuttered during the US Government partial shutdown.

Swain is also considering canceling another $6 billion of Puerto Rico's debt that the fiscal oversight board argues violated constitutional debt limits. 

"Puerto Rico debt from 2012 and 2014 bonds should be voided as the island had already exceeded it's legal debt limit," said LeCompte who serves on United Nation finance expert groups. "The island wrestles with a 60% child poverty rate and is still recovering from the hurricanes. Debt needs to be cut for both legal reasons and moral reasons."

As the Puerto Rico bankruptcy process continues, the government shutdown is slowing a budget decision on $600 million dollars in food aid for poor families in the US Territory. On Thursday, the White House wrote Congress opposing funding for Puerto Rico's Nutrition Assistance Program (NAP) that aids more than a million people on the island. The House of Representatives approved NAP funding in their version of the budget, now stalled during the shutdown.

"Access to food for poor families should not be used as a political bargaining chip in the budget shutdown negotiations," said LeCompte. "Puerto Rico is trapped in debt and rebuilding from hurricanes. Cutting food subsidies to the poor is just inhumane."

Judge Delays Ruling on Puerto Rico Debt Deal

January 18, 2019

Washington DC - On Thursday, Judge Laura Taylor Swain delayed approval of a $17 billion debt deal between Puerto Rico "COFINA" creditors and the island's oversight board. Citing concerns that her ruling could alter Puerto Rico's constitution, the judge requested additional materials to review on Monday from the federally appointed oversight board.

"We are concerned that the plan under consideration doesn't cut enough debt," said Eric LeCompte who heads Jubilee USA and has monitored the island's financial situation since 2015. "I am worried that this type of plan will mean Puerto Rico will be trapped in an endless cycle of debt."

In court, opponents of the debt plan requested that Swain further delay any decision until the Internal Revenue Service can review the tax status of new bonds that are a part of the deal. The IRS can not currently assess the bonds because their doors are shuttered during the US Government partial shutdown. Swain is also considering canceling another $6 billion of Puerto Rico's debt that the fiscal oversight board argues violated constitutional debt limits.

"Puerto Rico debt from 2012 and 2014 bonds should be voided as the island had already exceeded it's legal debt limit," said LeCompte who serves on United Nation finance expert groups. "The island wrestles with a 60% child poverty rate and is still recovering from the hurricanes. Debt needs to be cut for both legal reasons and moral reasons."

As the Puerto Rico bankruptcy process continues, the government shutdown is slowing a budget decision on $600 million dollars in food aid for poor families in the US Territory. On Thursday, the White House wrote Congress opposing funding for Puerto Rico's Nutrition Assistance Program (NAP) that aids more than a million people on the island. The House of Representatives approved NAP funding in their version of the budget, now stalled during the shutdown.

"Access to food for poor families should not be used as a political bargaining chip in the budget shutdown negotiations," said LeCompte. "Puerto Rico is trapped in debt and rebuilding from hurricanes. Cutting food subsidies to the poor is just inhumane."