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An Overview of the Puerto Rico Fiscal and Economic Crisis: What’s Next?

1h 3m

Created on February 01, 2017

Beginner

Overview

On June 30, 2016, the U.S. Congress enacted the Puerto Rico Oversight, Management, and Economic Stability Act (known as “PROMESA”) to address Puerto Rico’s decade-long fiscal and economic crisis. This presentation, taught by O’Melveny & Myers Partner John Rapisardi and Associate Jacob T. Beiswenger, provides an overview of the current conditions in Puerto Rico that created the crisis, including the island’s unsustainable level of public debt and rising annual deficits, lack of access to the capital markets, substantial unfunded pension liabilities, rising unemployment, and unprecedented outmigration of residents.

In addition, Messrs. Rapisardi and Beiswenger discuss several legislative actions and landmark U.S. Supreme Court decisions leading up to the passage of PROMESA. They examine key provisions of the PROMESA legislation in detail. Their program also reviews and assesses current efforts to restructure Puerto Rico’s debts under PROMESA to achieve its dual goals:  (i) achieving fiscal responsibility; and (ii) restoring access to the capital markets. Finally, the presenters review the recent letters exchanged between the Oversight Board and the new administration and the implications of the positions being asserted by each party.

Learning Objectives: 

  1. Understand the establishment of the PROMESA Oversight Board and its role in restructuring Puerto Rico’s debts

  2. Review the implementation of a temporary litigation stay related to “Liability Claims” under Section 405 (and related stay relief actions) 

  3. Identify the fiscal plan certification process under Title II and the role of critical projects under Title V
  4. Become familiar with the  voluntary agreement certification process for consensual debt restructurings under Title VI, and the key components of an in-court restructuring proceeding under Title III (including important differences from Chapter 9 and Chapter 11 restructurings under the U.S. Bankruptcy Code)
  5. Assess key intra-bondholder priority issues

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