(Photo: britannica.com)

Puerto Rico board to ask court to delay debt restructuring

(Photo: britannica.com)

Puerto Rico’s debt restructuring faces a potential delay as the island’s oversight board plans to ask the court shepherding the commonwealth’s record bankruptcy to postpone hearings while the government works to address the coronavirus.

Puerto Rico is seeking to restructure US$18 billion in debt.

Puerto Rico is seeking to reduce nearly $18 billion of debt tied to the commonwealth and fix a broke pension system that owes current and future employees $50 billion. The board in February filed a debt adjustment plan to the court and is now seeking to postpone hearings on that proposal, the board said in a statement Saturday.

“In light of Puerto Rico’s current reality, the oversight board believes that the government and the oversight board’s sole focus should be on getting Puerto Rico through this unfortunate crisis,” the board said in the statement. “The board will present a motion in court to adjourn consideration of the proposed plan of adjustment’s disclosure hearing until further notice.”

Governor Wanda Vazquez on March 15 restricted the government to providing essential services and closed most businesses as a way to help decrease the spread of the disease. Island officials anticipate the virus will negatively impact the island’s economy during the next two quarters.

A drop in Puerto Rico’s revenue collections might prompt a revision of the debt restructuring plan. The potential deal would cut Puerto Rico general obligations and debt guaranteed by the commonwealth and interest to $10.7 billion from $18.7 billion. The overall plan slashes debt and non-bond claims to $11 billion from $35 billion.

Puerto Rico fell into bankruptcy in May 2017 and since then has suffered natural disasters. Hurricane Maria slammed into the island in September 2017, destroying its electrical grid and killing thousands. A 6.4-magnitude earthquake struck the island on Jan. 7.