Puerto Rico is making its case in bankruptcy court for a plan to slash billions of dollars in debt, an expensive process that has so far racked up nearly $1 billion in legal and professional fees that island residents will pay, Bloomberg News reported. Hurricanes, earthquakes, ousting a governor from office and the coronavirus pandemic have prolonged the commonwealth’s bankruptcy to more than four years, adding to its costs and keeping the island under a cloud of default. Now that may finally change as U.S. District Court Judge Laura Taylor Swain began confirmation hearings Monday on Puerto Rico’s debt-restructuring plan, which eases the burden from $33 billion of bonds and other debt, including cutting $22 billion of bonds tied to the central government down to $7.4 billion. It would also create a reserve trust to prop up its broken pension system. Puerto Rico’s bankruptcy is the largest ever in the $4 trillion municipal-bond market, surpassing Detroit’s 2013 filing. The confirmation hearings follow years of negotiations with bondholders, insurance companies and labor groups over how to reduce the island’s obligations. Exiting bankruptcy will help the island move on and rebuild an economy that contracted for years.
