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

(96 Ratings)

Produced on: February 01, 2017

Course Format On Demand Audio

Taught by


Course Description

Time 63 minutes
Difficulty Beginner

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


John J. Rapisardi

O'Melveny & Myers LLP

John J. Rapisardi, Co-Chair of the Firm’s Global Restructuring Practice, has 30 years of domestic and international debtor and creditor restructuring experience across a variety of industries, including automotive, casinos, chemical, health care, retail, real estate, satellite, sports franchises, textile and telecommunications.

Consistently recognized as one of the leading restructuring lawyers in the US, Chambers USA has recently described John as a “tremendous lawyer” who is “well regarded in the industry” and praises his approach to both company and creditor-side transactions as “very measured, smart, diligent and thoughtful.” For his representation of the US Treasury Department in the Chrysler, General Motors and Delphi restructuring, Chambers USAdescribed John as a “go-to attorney on behalf of the US Treasury.”

Jacob T. Beiswenger

O'Melveny & Myers LLP

Jacob Beiswenger focuses his practice on corporate restructuring and insolvency matters. Jacob represents debtors, creditors and equity holders, as well as other significant parties-in-interest, including trustees, funds, institutional investors, and other financial institutions, in all aspects of Chapter 11 cases, cross-border insolvency proceedings under Chapter 15, and out-of-court restructurings. He has extensive experience in numerous facets of the restructuring process, including DIP financing and the use of cash collateral, contested valuation and plan confirmation proceedings, asset sales, recognition of foreign insolvency proceedings and related matters under Chapter 15, the claims resolution process, prosecution of avoidance actions, administration of post-confirmation liquidation trusts, and other matters involving motion practice and bankruptcy-related litigation.

His restructuring experience spans a variety of industries, including the financial, energy, healthcare, technology, telecommunications, automotive, education and retail sectors.


  • Represented the Official Committee of Unsecured Creditors in the following Chapter 11 cases:
  • Constar International Holdings, Inc.
  • Coda Holdings, Inc.
  • Dewey & LeBoeuf LLP
  • Digital Domain Media Group, Inc.
  • School Specialty, Inc.
  • Millennium Health, LLC: Represented an ad hoc committee of first-lien lenders in connection with negotiating a pre-packaged Chapter 11 plan of reorganization (including the documentation of a plan support agreement, exit term loan facility, amended corporate documentation, and litigation trust agreements), and prosecuting the plan in a 40-day Chapter 11 proceeding
  • MtGox Co. Ltd.: Represented the Japanese bankruptcy trustee of MtGox, formerly the largest bitcoin exchange in the world, in connection with MtGox’s Chapter 15 bankruptcy proceeding and related matters
  • LightSquared, Inc.: Represented investment fund in offering alternative Chapter 11 plan and accompanying DIP financing
  • Central European Distribution Corp.: Represented ad hoc committee of convertible noteholders in connection with negotiating and prosecuting a pre-packaged Chapter 11 plan of reorganization in a 60-day Chapter 11 proceeding


Julie A. B.

Puerto Rico is supposed to be America’s paradise island. Instead, it’s become famous for its ballooning debt crisis ("America’s Greece," some say). In this program, Lawline faculty member Rapidardi elucidates a matter that continues to grab headlines (e.g., Broadway’s Hamilton creator Lin-Manuel Miranda joins HBO’s Last Week Tonight’s host John Oliver in calling for relief by means of Rap lyrics). Rapidardi’s synopsis of Puerto Rico’s fiscal and economic crisis explains how the massive debt got so bad and forecasts what’s next for the island. The knowledgeable speaker further shares extensive supplemental resources (e.g., The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”); PROMESA legislative history; Oversight Board’s Nov. 23, 2016 letter; Oversight Board’s Dec. 20, 2016 letter; Government’s Jan. 4, 2017 response; GO Bondholders’ Jan. 6, 2017 support letter; Government’s Jan. 12, 2017 letter; Oversight Board’s Jan. 18, 2017 letter; Government’s Jan. 20, 2017 letter; and Government’s Jan. 22, 2017 letter). The 239-pages of complementary material serve as a great reference for those seeking to learn more about Puerto Rico’s predicament.

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