Puerto Rico will formally end its bankruptcy on Tuesday as the federally appointed financial oversight board implements key provisions of the commonwealth’s debt adjustment plan, including the establishment of a pension reserve trust and the exchange of existing bonds for new debt, Reuters reported. An emergence from bankruptcy has been a long time coming for Puerto Rico, which has been in Title III since May 2017. In January, U.S. District Judge Laura Taylor Swain approved a $135 billion debt-adjustment plan. On Tuesday, the financial transactions outlined in that plan, including approximately $10 billion in settlements with creditors, will go into effect, the oversight board said on Monday. That amount includes $7.2 billion for general obligation bondholders, $1.4 billion for public employees' retirement accounts, and $200 million for general unsecured creditors, according to the board. The plan reduces $33 billion in bond debt to $7 billion and cuts overall debt by around 75%. It includes protections that limit how much debt Puerto Rico can take on in the future. The plan also slashes the commonwealth’s annual debt service to around $1.5 billion from $3.9 billion previously. Puerto Rico had not made a payment on its general obligation bond debt since early 2016. But that plan only addresses the commonwealth’s own debt. The case is In re Puerto Rico Electric Power Authority, U.S. District Court, District of Puerto Rico, No. 17-04780.
