Puerto Rico's oversight board is holding its eighth public meeting in San Juan at the Sheraton Hotel Convention Center. In executive session on Tuesday, the board rejected a debt restructuring deal between bond holders and Puerto Rico's power company known as PREPA.
“The PREPA deal was a bad deal and the board was right to reject it,” noted Eric LeCompte, Executive Director of Jubilee USA. LeCompte testified to Congress and the oversight board on the island's debt crisis. "Puerto Rico needs significant debt relief and the PREPA deal fell short of a serious debt haircut."
The PREPA restructuring now likely moves to the Title III bankruptcy process. The process was created by Puerto Rico debt crisis legislation.
“The Title III bankruptcy process is important because it can deal with all of Puerto Rico's debt. All of the island's debt should be restructured in this one comprehensive process that can deeply cut the debt,” said LeCompte.
This week, Judge Laura Taylor Swain continued the Title III bankruptcy proceedings and earlier this month appointed a team of federal judges to act as mediators in the bankruptcy process. The team will meet with representatives of Puerto Rico and its creditors for the first time on July 12.
“Puerto Rico's debt has a human cost. Nearly 60% of kids on the island live in poverty,” noted LeCompte who serves on United Nations debt expert groups. "Congress made a promise to reduce child poverty on the island and the debt needs to be restructured in ways that will lift kids out of poverty."
The oversight board meets on the one year anniversary of President Obama signing a law that created the board and established a Congressional task force to make recommendations to reduce child poverty. The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) established the Title III bankruptcy process and protections for Puerto Rico from debt lawsuits.