Puerto Rico’s creditors and government officials have plenty left to fight about before the island has a chance to end its main bankruptcy case as soon as October, a federal court mediator said in a report yesterday, Bloomberg News reported. Although key bondholders and Puerto Rico’s financial oversight board reached a tentative deal during confidential mediation, many complex legal issues and disputes still being negotiated threaten to derail the bankruptcy-exit plan, the lead mediator, U.S. Bankruptcy Judge Barbara Houser, said in the court filing. “The parties’ differences of opinion on certain issues have made that negotiation difficult,” Houser wrote to the federal judge overseeing Puerto Rico’s reorganization. “The mediation team agrees that these issues need to be decided on the merits as soon as possible, as the parties’ disparate views on these issues have been a handicap to the negotiation” of certain issues. To avoid having the bankruptcy-exit plan get bogged down in court, Judge Houser urged U.S. District Court Judge Laura Taylor Swain to temporarily halt certain suits, including a challenge to the legitimacy of some general-obligation bonds filed by a committee of unsecured creditors. Other fights should be decided as soon as possible, including whether investors who hold revenue bonds have the right to to sue and what property rights, if any, they have.
