<span class="articleLocation”>Puerto Rico’s new government tapped law firm
Dentons to help it develop a fiscal turnaround plan and lead
restructuring negotiations with creditors holding some $70
billion in debt, the firm announced on Thursday.
Dentons will replace Cleary Gottlieb, which had served as
legal counsel under the administration of ex-Governor Alejandro
Governor Ricky Rossello, who was sworn in on Jan. 2, had
sharply criticized Garcia Padilla’s financial policies, which
were shaped in large part by Cleary, during his campaign.
Garcia Padilla’s financial adviser, Millstein and Co, will
also likely be replaced under Rossello.
In a statement on Thursday, Dentons said the engagement
would be led by bankruptcy partner Sam Alberts, who represented
a committee of retirees in Detroit’s municipal bankruptcy in
Puerto Rico faces months of complicated debt restructuring
talks with myriad creditor groups. The U.S. territory owes $18
billion in general obligation debt, backed by a constitutional
promise; $15 billion in so-called COFINA debt backed by sales
tax proceeds; and billions more in debt at public agencies like
power authority PREPA and water utility PRASA.
Nearly half the island’s 3.5 million residents live in
poverty. Its unemployment rate is more than twice the U.S.
average, and its population continues to fall as locals flock to
the U.S. mainland.
Under a federal rescue law known as PROMESA, passed last
year, the island must submit a fiscal turnaround plan to a
federal board appointed last year to manage the island’s
finances. The board will also likely play a role in facilitating
debt restructuring talks between the island and creditors.
Garcia Padilla had pushed for sharp reductions in debt
payments to creditors, and ordered several defaults during his
term. Rossello, who favors U.S. statehood for the island,
believes it should try to limit such cuts while imposing
belt-tightening measures like consolidating public agencies.
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