Puerto Rico and its main electric utility have spent more than $60 million in legal and advisory fees from firms such as Cleary Gottlieb Steen & Hamilton LLP and Millstein & Co. over the past two years as the governor and public finance officials have sought to restructure the island’s $72 billion debt burden, Bloomberg News reported today. Commonwealth officials plan to unveil a proposal next week expected by analysts to seek a reduction in debt payments that may lead to protracted negotiations with creditors. Unlike Detroit, Puerto Rico localities cannot file for chapter 9 bankruptcy protection, leaving the island without a clear legal framework to resolve its debt crisis. “It makes sense they would need to rely on consultants more than the average issuer in a similar situation,” said Matt Fabian, a partner at Concord, Mass.-based Municipal Market Analytics. “It’s an incredibly complex restructuring, with a lot of different investor groups, a lot of different securities and moving parts.” A Puerto Rico restructuring would be the largest ever in the $3.6 trillion municipal-bond market.
