WASHINGTON – Laura Taylor Swain, a federal court judge in New York with previous bankruptcy experience, will oversee Puerto Rico’s record-setting restructuring process under PROMESA after Supreme Court Chief Justice John Roberts selected her for the role on Friday.
Swain currently sits on the U.S. District Court for the Southern District of New York and has been in that position since she was appointed by President Bill Clinton in 2000. She was a federal bankruptcy judge for the Eastern District of New York from 1996 until 2000 and had been in private practice with Debevoise & Plimpton from 1983 until 1996, according to a release when she was nominated to the southern district post. While at Debevoise, her work primarily involved the Employee Retirement Income Security Act, employee benefits, executive compensation, and employee law, according to the release.
She also chaired the Advisory Committee of the Judicial Conference of the United States on the Federal Rules of Bankruptcy Procedure from 2007 to 2010 and is a graduate of Harvard University and Harvard Law School.
Swain will oversee the largest municipal bankruptcy ever, which started to unfold on Wednesday when Puerto Rico Gov. Ricardo Rosselló asked the seven-member oversight board established under PROMESA to put the commonwealth’s debt into the bankruptcy-like provision of PROMESA called Title III. PROMESA had dictated that the chief justice of the Supreme Court would be responsible for naming a district court judge to preside over the proceedings. Roberts did not make any comments on his choice in the release announcing the decision.
A federal courts spokesperson said Swain would be presiding over the proceedings in Puerto Rico despite her current seat on the New York federal court. The spokesperson could not say whether Swain would be residing in Puerto Rico or traveling back and forth from New York as the proceedings unfold.
Sources said that the choice of a federal judge who sits outside the U.S. District of Puerto Rico may be beneficial in the restructuring process as it may allow Swain to better avoid local political pressures.
Joseph Krist, a partner with Court Street Group in New York and a long-time muni analyst, said Swain is a well-respected judge and that her bankruptcy experience makes it a win-win choice. He added that her qualifications make her a good choice for both Puerto Rico and its creditors.
Puerto Rico is currently struggling with roughly $70 billion in debt and $50 billion in unfunded pension liabilities. It is also facing challenges from creditors over the fiscal plan that Rosselló created and the oversight board approved earlier this year. The creditors have complained to Congress about how they believe the fiscal plan doesn’t respect Puerto Rico’s constitution and instead elevates certain costs and services over the repayment of general obligation debt. Assured Guaranty, Assured Guaranty Municipal, and National Public Finance Guarantee filed a lawsuit in the U.S. District Court for Puerto Rico making similar claims on Thursday.
Representative Nydia Velázquez, a New York Democrat who has been a key figure in Congress’ deliberations over Puerto Rico, said it is her hope that Swain “is impartial, fair and will bring order to what has been a chaotic process.”
“Only through the orderly restructuring of Puerto Rico’s debt can we give hope for a better future to all those that call the island home,” Velázquez said.
