Lawyers for the administration of Puerto Rico Gov. Ricardo Rosselló and for the Unsecured Creditors Committee are discussing a deal in the Government Development Bank debt restructuring case.
The discussions were announced by Peter Friedman, the lead lawyer for the GDB and Puerto Rico’s Fiscal Agency and Financial Affairs Administration, in New York District Court Wednesday afternoon. Both the GDB and FAFAA are part of Rosselló’s government. Friedman is a partner with O’Melveny & Myers.
A hearing was set for 2 p.m. for Friedman and the lead lawyer for the unsecured creditors, Luc Despins, to present arguments on the unsecured creditors' claim that they should be given legal standing in the GDB case. Despins is a partner with Paul Hastings.
Puerto Rico bankruptcy Judge Laura Taylor Swain entered the courtroom at 2:15 p.m., already aware of the discussions.
After Friedman said he was involved in talks with the unsecured creditors and lawyers for the Oversight Board, he said the sides had agreed to delay the hearing to 10 a.m. on Friday.
Swain said it was good to have discussions. She told Friedman to tell her if something happened that “obviate[s]” the need for the hearing.
Parties didn't say if the talks are just on the issue of the committee's standing or to address other issues in the GDB restructuring.
If Swain grants the unsecured creditors standing, there is a good chance they will be able to scuttle the GDB deal, Puerto Rico attorney John Mudd said Tuesday. Mudd represents a municipality in the Puerto Rico central government bankruptcy.
The GDB deal was reached through Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act, which covers negotiated debt restructurings. The deal addresses about $4.1 billion of debt. Among other terms, the GDB’s proposed restructuring would require the exchange of existing bonds for new bonds with par values 45% lower.
From mid-August through mid-September GDB bondholders voted to approve the deal. For the deal to go forward the Puerto Rico Oversight Board will have to approve it and, subsequently, so will Swain.
