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A coalition of progressive groups on Wednesday called for Congress to abolish Puerto Rico's Fiscal Control Board, which they say has deepened economic strain for the U.S. territory's residents, The Hill reported. Leading the call are Action Center on Race and the Economy (ACRE) and the Center for Popular Democracy, which released a 76-page report calling the Board's five-year tenure a failure. The Fiscal Control Board was created in 2016 as part of PROMESA, Congress's response to the island's fiscal debt crisis. "Although Congress passed PROMESA to provide much-needed relief to Puerto Rico in the midst of a crushing debt crisis, the Board has used its power to impose devastating austerity measures and negotiate unsustainable debt restructuring plans that enrich Wall Street and hurt Puerto Ricans," reads the report. Under the legislation, control over the island's budget was essentially handed over to the Board, an unelected panel that ultimately responds to Congress. The legislation was controversial from its inception, particularly among progressives in Congress who reluctantly supported it, given few other options at the time. The Board's consistent prescriptions of fiscal orthodoxy and austerity have created tension with those progressives, many of whom see Puerto Rico's current fiscal balance as a window to reverse PROMESA.

Judge Laura Taylor Swain rejected a proposed committee to represent retail holders in Puerto Rico's debt restructuring while she allowed parties representing Debt Recovery Authority bondholders to continue their efforts to protect their collateral from Oversight Board actions, The Bond Buyer reported. Judge Swain made both rulings at Wednesday’s omnibus hearing for the Puerto Rico bankruptcy. While Puerto Rico bondholder and New York City attorney Peter Hein had asked Judge Swain to create a committee, she rejected the idea. She said that U.S. law required that a committee of parties to a suit be “necessary” and not just “useful” or “appropriate,” calling it a high standard.

The federally appointed financial oversight board tasked with guiding Puerto Rico’s debt restructuring has finalized a deal with two key creditors, adding to growing support for the proposed plan to fix the commonwealth’s debt crisis, Reuters reported. The oversight board, represented by Proskauer Rose, announced its pact with bond insurers Ambac Financial Group and Financial Guaranty Insurance Company in a statement on Tuesday. The settlement resolves the bond insurers’ litigation over rights to certain revenues and sets aside $260 million for holders of debt issued by the Puerto Rico Infrastructure Financing Authority (PRIFA). Puerto Rico filed for its bankruptcy-like court proceeding, known as a Title III case, in May 2017 to address its approximately $120 billion in public debt and pension liabilities. In recent months, the board has struck deals with a variety of powerful creditor groups that should help it conclude the Title III proceedings by the end of the year. Under the proposed debt adjustment plan, Puerto Rico’s $35 billion in public debt would be reduced to $7.4 billion and more than $50 billion in pension liabilities would be restructured. The proposal has support from several groups of bondholders and other creditors but still faces opposition from the Puerto Rican government, as well as some retail investors and individual citizens. Ambac and FGIC insure hundreds of millions of dollars in PRIFA bonds, which the authority stopped paying in 2015. Under the agreement announced Tuesday, PRIFA bondholders will collect $260 million in cash — a 90% discount to PRIFA claims, according to the board’s statement. Of that amount, Ambac will receive $34.75 million and FGIC will receive $21.75 million, according to court papers.

Puerto Rico’s financial oversight board struck a bankruptcy deal with the main group of the island’s unsecured creditors, a breakthrough that promises to make it easier to win final court approval of its plan for cutting $35 billion of the government’s debt, Bloomberg News reported. The board and the unsecured creditors reached the understanding on Monday, Brian Rosen, a lawyer at Proskauer Rose LLP, told U.S. District Judge Laura Taylor Swain during a hearing Yesterday. The deal may put pressure on the remaining bond insurers that are among the last still fighting a proposed debt-restructuring plan. At the hearing, Puerto Rico and creditors are discussing the island’s plan for restructuring the last major chunks of debt to be dealt with in the four-year-long bankruptcy, including the government’s general-obligation bonds. On the eve of the hearing, Puerto Rico and the unsecured creditors reached an agreement that would increase their payouts to $575 million from $125 million, Rosen said.

U.S. District Judge Laura Taylor Swain has set a schedule for considering establishing a committee to represent retail holders of Puerto Rico bonds, The Bond Buyer reported. Judge Swain on June 30 approved a motion by a retail bondholder to consider the committee, which would provide legal representation of retail bondholders in the bankruptcy. New York attorney and Puerto Rico bondholder Peter Hein had made earlier motions to establish a retail bondholders committee but Swain had struck them down in April 2019.

The Puerto Rico Oversight Board on Friday filed suit against a law that would scuttle the negotiated plan of adjustment for the central government debt, the Bond Buyer reported. The board filed an adversary proceeding in the Title III bankruptcy in the U.S. District Court for Puerto Rico against the governor and legislative leaders in defense of the negotiated plan of adjustment. Puerto Rico Executive Director Natalie Jaresko said that the law the board was suing against would derail four years of progress toward a consensual agreement.

Puerto Rico’s attempts to overhaul its troubled public power utility are off to a rough start. Luma Energy LLC, the private consortium that began managing the grid for the Puerto Rico Electric Power Authority (Prepa) on June 1, has been besieged by protests, a cyberattack, and a major fire that briefly knocked out power to 900,000 customers on the island of 3.3 million, Bloomberg News reported. Improving the electrical system is key to pulling the U.S. territory out of a deep economic slump and stopping rampant population decline. Blackouts and appliance-frying voltage spikes are common, even as customers pay rates that are higher than on the U.S. mainland. Hurricane Maria in 2017 decimated the already weak grid, and this year’s Atlantic hurricane season began just as Luma took over. Many on the island fear Luma's contract will eventually lead to price hikes. Proponents of the deal, including Governor Pedro Pierluisi, say new private management — along with $10 billion in federal reconstruction funds — will help modernize the grid. They also hope it will revive a deal to restructure the utility’s $9 billion in debt and attract desperately needed businesses.