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Top Treasury Department and Puerto Rican officials are begging the Senate to move quickly on a bill to help the commonwealth handle more than $70 billion in unpayable debt, The Hill reported today. Funding for public services in Puerto Rico is drying up under the commonwealth’s shrinking economy and lack of access to credit markets, so leaders are pushing the Senate to clear a House-passed bill before a crucial debt payment that is due July 1. “We need the bill by July 1,” Puerto Rico Gov. Alejandro García Padilla (D) said during a Thursday panel hosted by the progressive Center for American Progress Action Fund. “We need the bill yesterday.” Senate Majority Leader Mitch McConnell (R-Ky.) is expected to hold a vote on the debt measure next week before the chamber leaves town for its July 4 recess. The bill passed the House this month with wide bipartisan support and is expected to clear the Senate, though Democrats have refused to publicly support the legislation. Read more. 

For a summary of H.R. 5278 from the forthcoming July edition of the ABI Journal, please click here. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

A federal judge has dismissed a case against U.S. Sen. Cory Booker (D-N.J.) that charged he failed to properly oversee Newark's now bankrupt watershed corporation when he served as mayor of New Jersey's largest city, NJ.com reported yesterday. However, U.S. Bankruptcy Judge Vincent F. Papalia let stand a civil complaint against Vaughn McKoy, the former board vice chairman of the Newark Watershed Conservation and Development Corp. The ruling yesterday came in the wake of a lawsuit filed last year by the provisional trustees of the agency against Booker and McKoy, along with former executive director Linda Watkins-Brashear and more than a dozen others, following allegations that the non-profit corporation had bilked millions of dollars from taxpayers. Created in 1973, the agency was formed to manage Newark's vast watershed properties in Morris, Passaic and Sussex counties, and later expanded its reach to manage the city's Pequannock water treatment facility and manage Newark's reservoirs. The corporation operated under the radar screen for decades, until it came under fire in a scathing report issued in 2014 by the state Comptroller's Office, which accused the former director of the agency and her cohorts of siphoning off millions of city dollars in illegal payments, insider deals and risky stock ventures.

Puerto Rico’s government-owned electricity provider won approval to impose a new surcharge on customers to repay bonds, a key step in the utility’s plan to restructure its $9 billion of debt, Bloomberg News reported yesterday. The island’s energy commission on Tuesday signed off on a 3.10-cent per kilowatt hour charge by the Puerto Rico Electric Power Authority, known as PREPA, according to a statement from the commission. The step is a crucial part of an agreement the utility reached in December, when investors agreed to take a 15 percent loss and suspend principal payments for five years by exchanging their bonds for new securities backed by the charge. PREPA faces other hurdles before it can execute the restructuring deal. The utility is negotiating with bond insurers and investors holding about 35 percent of PREPA’s securities to avoid defaulting on a $420 million principal and interest payment due July 1. Under the pact, the bonds must also carry an investment grade from one of the three major credit-rating companies. Read more. 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

U.S. Senate Democratic leader Harry Reid said yesterday that amendments were necessary to a Puerto Rico debt bill that Senate Majority Leader Mitch McConnell said would be voted on by next week, Reuters reported yesterday. Reid said that changes were needed to the federal board overseeing the restructuring of Puerto Rico's $70 billion debt under the bill, but he did not say whether Democrats would be successful in making any changes. The House of Representatives passed a Puerto Rico debt relief bill on June 9, following months of internal debate. Supporters hope the Senate passes that bill, without any amendment, before July 1, when Puerto Rico faces a deadline for making a $1.9 billion debt payment. The commonwealth, which is a U.S. territory, is suffering a poverty rate of about 45 percent and has been hobbled by worsening debt problems. Some schools and medical facilities are closing and thousands of residents are relocating to the U.S. mainland, further shrinking Puerto Rico's tax base. While Reid said he had "some serious concerns" with the current bill, which was negotiated by the Obama administration and lawmakers in the House, he did not say whether he expected any amendments to succeed in the Senate. Read more. 

In related news, Puerto Rico drew back the curtain on its talks with bondholders, underscoring how far apart the sides remain in a fight over the restructuring of $70 billion of municipal debt, the Wall Street Journal reported today. Puerto Rico’s Government Development Bank yesterday disclosed terms of various restructuring proposals discussed in negotiations that have ended. The talks included a committee representing investors in the commonwealth’s general obligation bonds, a group holding senior sales-tax-backed, or “Cofina,” bonds, and a single investor with large holdings of general obligation bonds and junior Cofina bonds, according to the disclosure. Uncertainty about a looming U.S. congressional vote on a restructuring framework for Puerto Rico has made it difficult for the island to come to terms with the various creditor groups, investors and analysts said. Neither the island nor its bondholders are likely to agree to a deal until rules are worked out on Capitol Hill, they said. Read more. (Subscription required.) 

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage. 

A bankruptcy filing by the city of Hartford is one of several options for potentially solving the city's fiscal woes, its mayor says, but legally declaring insolvency is at the bottom of a list of solutions the city is pursuing, HartfordBusiness.com reported today. Not only would bankruptcy cast a darker pall on the city, but even if Hartford won the state's permission tomorrow to file chapter 9, its over-reliance on too much debt and too little revenue from a limited, overtaxed pot of residential/commercial properties would continue hounding it, Mayor Luke Bronin said. New regional revenue sources, along with options other than a costly bankruptcy filing, which would primarily benefit the city by allowing it to crack open collectively bargained pacts with its city workers, must be identified, Bronin says. Hartford's options for righting its fiscal ship are extremely limited. Hartford sits as the state's most property-tax burdened municipality, with a mill rate of $74.29 for every $1,000 of assessed property value. Read more. 

Is chapter 9 coming to a city near you? Panel at ABI’s Central States Bankruptcy Workshop will examine in June. Click here for more information and to register.