Puerto Rico's Plan Of Adjustment 'Goes Effective'

Published date28 March 2022
Law FirmCadwalader, Wickersham & Taft LLP
AuthorMr Casey Servais

On March 15, 2022, the Financial Oversight and Management Board for Puerto Rico announced that the Plan of Adjustment for the Commonwealth of Puerto Rico became effective, more than four years after Puerto Rico commenced restructuring proceedings under Title III of the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"). PROMESA is a bespoke piece of federal legislation enacted in 2016 to address Puerto Rico's debt crisis, and incorporates most of chapter 9 of the Bankruptcy Code. The Commonwealth's Title III case is the largest municipal restructuring proceeding in U.S. history.

Under the Plan, the Commonwealth:

  • reduced more than $33 billion of its pre-petition bond debt and other claims. Commonwealth creditors will receive $7.4 billion in new bond debt and over $8 billion in cash on the Effective Date, as well as securities designated as "contingent value instruments" that pay out based on the outperformance of actual revenues over projected revenues;
  • eliminated all debt of the Employees Retirement System of the Government of Puerto Rico ("ERS") and the Puerto Rico...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT