Case Study: Commonwealth of Puerto Rico
In the Wake of Disaster, Tackling the Largest Municipal Restructuring Recent History
With more than US$70 billion of funded debt and approximately US$50 billion of pension obligations, Puerto Rico is facing a severe fiscal crisis exacerbated by a lack of access to capital markets, a contracting economy, and the destruction and humanitarian issues caused by Hurricanes Irma and Maria and the devastating earthquakes.
O’Melveny is representing all of the Puerto Rico governmental entities in need of financial restructuring under both Title III and Title VI of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), which provides for both in-court and out-of-court restructuring paths similar to the US Bankruptcy Code.
O’Melveny’s role includes advising the Puerto Rico Electric Power Authority (PREPA) on its restructuring of more than US$8 billion worth of bonds to facilitate a planned transformation of the electric sector in Puerto Rico. Along with numerous high-profile courtroom victories, and the completion of more than US$23 billion of funded debt, O’Melveny negotiated the terms of a restructuring support agreement with over 98% of PREPA’s bondholders. The team is now working with PREPA to evaluate that restructuring support agreement in light of the COVID crisis and its impact on the Island.