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Two major holders of Puerto Rico bonds that opposed a restructuring deal for the bankrupt U.S. commonwealth’s Sales Tax Financing Corporation (COFINA) revenue bonds are now part of the agreement, the island’s federally appointed oversight board announced on Friday, Reuters reported. The board said that Aurelius Capital Master Ltd and Six PRC Investments LLC, an affiliate of Monarch Alternative Capital, have opted to support the deal. Both own significant amounts of COFINA senior and junior bonds, but mostly own Puerto Rico general obligation (GO) bonds. The move ends opposition from the island’s Ad Hoc Group of GO Bondholders to a COFINA debt restructuring plan, according to the board. The three-member group, which includes Aurelius and Monarch, objected to a COFINA settlement framework in bankruptcy court in June, calling parts of it unlawful. GO and COFINA bondholders have long debated the ownership of Puerto Rico’s future sales tax revenue. Claims by Aurelius and Monarch in a lawsuit filed in federal court in 2016 challenging COFINA’s constitutionality will also be dropped, under terms of the agreement. The deal is expected to be presented to a U.S. judge overseeing Puerto Rico’s bankruptcy case next month, the statement added.

Billions in federal dollars are pouring into Puerto Rico to address damage wrought by Hurricane Maria last year, rekindling concerns about the U.S. territory’s credibility as a fiscal steward, WSJ Pro Bankruptcy reported. Soon after the hurricane hit the island last September, Puerto Rico’s bankrupt power monopoly, PREPA, signed a $300 million contract with little-known Montana firm Whitefish Energy Holdings LLC to repair the damaged electrical grid. Irregularities quickly emerged in how the deal was awarded and priced, sparking inquiries from local and federal authorities and eroding the Puerto Rico government’s image. Sen. Maria Cantwell (D.-Wash.), called the deal “a great injustice to the U.S. taxpayer,” citing the “potentially inflated costs of time and material” and the “opaque and limited nature of PREPA’s bidding process.” Similar concerns are now resurfacing as federal funding flows in to repair damaged houses, roads and other infrastructure, including the power grid.

Investors who lost money on UBS Group AG mutual funds stuffed with Puerto Rico government bonds can’t sue as a group, a federal judge said Monday, a setback in their efforts to collect from the Swiss financial services giant, the WSJ Pro Bankruptcy reported. The ruling by Judge Sidney H. Stein of the U.S. District Court in New York means that investors in closed-end mutual funds managed by UBS Financial Services of Puerto Rico Inc. must pursue their claims individually through arbitration, a more difficult path to recouping damages, rather than proceeding as a single, certified class. Investors have claimed that UBS brokers told them their mutual funds were safe when in fact their assets were heavily concentrated in just a few Puerto Rican municipal bonds and the funds had used leverage to improve returns. Judge Stein said the plaintiffs’ circumstances and their decisions to buy and sell were so dissimilar that their claims needed to be adjudicated case-by-case.

The Puerto Rican government is taking a hard line on rebuilding properties decimated by last year’s Hurricane Maria, offering homeowners federal financial assistance only if they move out of flood-prone areas, the Wall Street Journal reported. Government officials say that they don’t want to rebuild communities on land that is vulnerable to soil erosion, chronic flooding and destruction from future storms. “We need to move families to a safe place,” said Luis Burdiel Agudo, president of the Economic Development Bank for Puerto Rico, a government-owned bank that is helping oversee the recovery. Whether to rebuild homes in areas that are likely to flood again is a major issue for communities in places like Texas and Florida, especially as the costs of insuring these homes soar and rising sea levels mean more frequent flooding. The federal government has tried to step up purchases of frequently flooded houses from their owners instead of repeatedly paying out money from the financially troubled federal flood-insurance program.

Creditors overwhelmingly approved a plan to restructure bonds issued by Puerto Rico’s insolvent Government Development Bank (GDB), according to preliminary voting results announced yesterday, Reuters reported. The U.S. Commonwealth’s Fiscal Agency and Financial Advisory Authority said final results are expected on or around Sept. 19. The deal would mark the first consensual debt restructuring under PROMESA, which aimed to rescue the island overwhelmed by $120 billion in debt and pension liabilities. Puerto Rico has been trying to restructure its debt since May 2017 through a form of bankruptcy in U.S. court and has other tentative deals with creditors that combined with the GDB agreement cover about 40 percent of its bonded debt. The next step would be final approval by Puerto Rico’s federally appointed financial oversight board and by U.S. Judge Laura Taylor Swain, who the government expects will issue an order around Nov. 6. 

Nearly a year after Hurricane Maria devastated Puerto Rico, many of the island’s roughly 44,000 small businesses that haven’t benefited from reconstruction spending are still struggling, Bloomberg News reported. About 2,400 businesses closed in the fourth quarter of 2017, more than double the amount that closed during the same period in 2016, U.S. Bureau of Labor Statistics data show. In total, 5,000 to 8,000 small businesses may have closed permanently since the storm, estimates Nelson Ramírez, president of the Centro Unido de Detallistas, a small business advocacy group in San Juan. The toll could climb to more than 10,000, he says, if insurers keep dragging their feet, energy costs keep increasing, and large numbers of Puerto Ricans keep relocating to the mainland. Because small employers represent about 80 percent of the private sector workforce, their health is crucial to the economy.