Tracing Puerto Rico's Journey Through Bankruptcy

By Law360 Staff | February 22, 2019, 9:11 AM EST

A federal appeals court ruled on Feb. 15 that the federal board charged with overseeing Puerto Rico's restructuring was unconstitutionally appointed and must either be confirmed by the U.S. Senate or replaced in 90 days. (AP)

Hurricane Maria ravaged Puerto Rico in September 2017, causing a wave of destruction that worsened an already struggling economy and further complicated the commonwealth's historic bankruptcy.

Law360 has been covering the novel proceedings surrounding the island's restructuring, which began in May 2017 and is governed by the Puerto Rico Oversight Management and Economic Stability Act, or PROMESA.

Here are some of the key milestones in the bankruptcy, as well as the constitutional challenges surrounding the controversial implementation of PROMESA.


Feb. 15, 2019
Puerto Rico Fed Board Was Illegally Appointed: 1st Circ.
The federal board charged with overseeing Puerto Rico's financial overhaul and addressing its debt crisis was unconstitutionally appointed and must either be confirmed by the U.S. Senate or replaced in accordance with the law within the next 90 days, the First Circuit ruled Friday.

Feb. 14, 2019
Puerto Rico Fed. Board Sues For Island Senate's Financial Info
The federally appointed board overseeing Puerto Rico's financial overhaul announced Thursday that it has filed a complaint to compel the production of documents from the territory's Senate to get a fuller understanding of the island government's bank account balances.

Feb. 4, 2019
Puerto Rico Gets Green Light For $18B Sales Tax Debt Plan
A plan expected to save Puerto Rico nearly $18 billion by restructuring debt carried by the Puerto Rico Sales Tax Financing Corp., or COFINA, got the go-ahead on Monday from the judge overseeing the U.S. territory's bankruptcy-like proceedings.

Jan. 31, 2019
Puerto Rico Pension Bondholders Have Valid Liens: 1st Circ.
The First Circuit has ruled holders of bonds issued by Puerto Rico's public pension fund have valid liens on employer contributions, saying the collateral was described in enough detail in financing statements for the bondholders to make the claim.

Jan. 7, 2019
English Translation Key In 1st Circ. Puerto Rico Bond Dispute
The fate of billions of dollars in collateral from employer contributions to Puerto Rico's largest public pension fund could hinge on the fact that an official Spanish-to-English translation altered the English name of the fund, an action whose impact on bondholders staking a claim to the collateral was debated Monday before a First Circuit panel.

Dec. 20, 2018
Bipartisan Bill Targets McKinsey Conflicts In Puerto Rico
A bipartisan bill introduced Wednesday in the U.S. House of Representatives calls for enhanced disclosures by advisers contracted to work on restructuring proceedings in Puerto Rico, citing reports that consultant McKinsey & Co. may be looking out for its own investments in the commonwealth.

Dec. 12, 2018
Puerto Rico Tax Overhaul Expected To Provide $2B In Relief
Puerto Rico will have a lower corporate tax rate and a new tax credit aimed at creating a more attractive tax climate under a bill its governor recently signed that is expected to provide about $2 billion in tax relief.

Nov. 29, 2018
Puerto Rico Bankruptcy Fee Examiner Seeks More Scrutiny
The firms representing Puerto Rico's public debtors and creditor committees in the territory's restructuring cases should be subject to new controls over their ability to bill for experts and receive rate increases, a fee examiner has reported.

Nov. 28, 2018
Puerto Rico OKs New Policyholder Protections Post-Maria
Citing problems with insurers’ handling of claims following the devastation of Hurricane Maria last year, the governor of Puerto Rico on Tuesday signed into law six bills designed to expand coverage options for the island’s policyholders and expedite payments following disasters.

Nov. 7, 2018
Puerto Rico Gov't Bank Restructuring Deal Gets Court OK
The federal judge overseeing Puerto Rico's bankruptcylike proceedings on Tuesday approved a contentious $4.1 billion deal to restructure its Government Development Bank over the objections of some creditors, making it the first of the island’s insolvent public entities to successfully restructure its debts out of court.

Oct. 2, 2018
1st Circ. Judge Has Harsh Words For Trump In Maria's Wake
A little more than a year after Hurricane Maria swept through Puerto Rico and the rest of the Caribbean, First Circuit Judge Juan R. Torruella in an interview with Law360 sharply criticized what he felt was an inadequate response to the disaster by the federal government and President Donald Trump's comments disputing the death toll as a result of the storm.

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April 20, 2018
Puerto Rico Sales Tax Bond Fight Sparks Muni Market Anxiety
Municipal bond investors are paying close attention to what happens in a pending court fight over the validity of bondholder liens on Puerto Rican sales tax, experts say, warning of widespread consequences should investments thought to be bankruptcy-proof turn out otherwise.

May 9, 2017
Judge Handling Puerto Rico Case Seen As Strong Choice
Picked to oversee Puerto Rico's unprecedented $70 billion bankruptcy case, U.S. District Judge Laura Taylor Swain will be making decisions that could make or break the economically troubled island, but experts say her judicious temperament and legal acumen make her suited for the task.

May 3, 2017
Puerto Rico's $70B Case To Test Untried Restructuring Law
Puerto Rico's court-supervised $70 billion debt restructuring under specially crafted federal legislation plunges the territory into uncharted waters that may seem to resemble other big event bankruptcies, but where the U.S. Bankruptcy Code might not be the final word, experts say.

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Nov. 9, 2017
A Look At NYC Bar Association's Task Force On Puerto Rico
Last year, the New York City Bar Association created its Task Force on Puerto Rico to monitor and comment on the actions of stakeholders involved in the implementation of the Puerto Rico Oversight Management and Economic Stability Act. The task force's focus has naturally shifted in the aftermath of Hurricane Maria's catastrophic impact, say Roger Juan Maldonado and Neysa Alsina of the New York City Bar Association.

July 19, 2017
Turning Bust To Boom: P3 Initiatives Under PROMESA
Normally, investors and lenders to public-private partnerships avoid pursuing projects where the government’s ability to provide financial, operational and logistical support is subject to considerable uncertainty. But the tools provided by the Puerto Rican Oversight, Management and Economic Stability Act can help mitigate some of these risks and even facilitate future projects in Puerto Rico, say attorneys with Cleary Gottlieb Steen & Hamilton LLP.