Oct. 25 (Reuters) – Puerto Rico could see its four-year financial restructuring process dismissed by court without resolution if island lawmakers fail to approve legislation that would allow a $ 35 billion adjustment plan debt to continue.
U.S. District Judge Laura Taylor Swain, who oversaw Puerto Rico’s bankruptcy, said in a hearing Monday that she would consider dismissing the entire case, known as the Title III proceeding, if the plan collapses. Its future has become uncertain after the Puerto Rican Senate did not approve legislation until Oct. 22 to allow the issuance of new bonds, which is critical to the plan.
The federally appointed board responsible for overseeing Puerto Rico’s economic recovery process was to present its draft debt adjustment plan, which would reduce Puerto Rico’s $ 35 billion public debt to $ 7 billion. $ 4 billion, for court approval in a hearing beginning Nov. 8. That timeline is now in jeopardy due to the Senate’s failure to meet last week’s deadline.
The Senate will return from recess on Tuesday and lawmakers are working on amendments that could move the bill forward soon, according to court documents.
Meanwhile, lawyers for the Puerto Rican Oversight Board and government will resume confidential mediation to discuss ways to keep the plan alive.
A mediator will file a report on November 2 on whether the plan can go forward. If the mediator doesn’t think he can, the supervisory board will tell the court by November 4 whether it thinks the plan can be approved without the legislation or will present alternative measures it deems appropriate.
The judge said if council decides the plan can’t go ahead, she may consider dropping the case.
The Commonwealth spent nearly $ 1 billion on legal fees over the course of the case, according to court documents.
Reporting by Maria Chutchian; Editing by Alexia Garamfalvi and Chizu Nomiyama