[JURIST] The US District Court of the Southern District of New York on Wednesday began hearings on the restructuring of Puerto Rico’s debt. The hearing stems from Puerto Rico filing for bankruptcy protection [JURIST report] under Article 3 of PROMESA [text] for its $70 billion debt earlier this month. Chief Justice Roberts appointed [text, PDF] Judge Laura Taylor Swain two weeks ago to hear the case as she has an extensive history [NYT backgrounder] in large debt cases. While proceedings opened up this morning, reports have emerged that the main creditors are interested in mediation talks [Reuters report] to resolve the debt.
Puerto Rico has been seeking multiple avenues to solve the debt issue and have faced numerous problems with the debt. In February Puerto Rico Governor Ricardo Rosselló approved a law [JURIST report] to hold nonbinding referendum that would allow the US territory to vote on statehood. The referendum is to be held in June. The Governor Ricardo Rossello signed into law [JURIST report] in January a heavily-debated labor reform bill. The same month the US Court of Appeals for the First Circuit ruled that bondholders [JURIST report] of Puerto Rico’s Employee Retirement System deserve a hearing to determine if their case has merit to proceed. Last June the US Supreme Court ruled [JURIST report] in Puerto Rico v. Franklin California Tax-Free Trust that Section 903(1) of the Bankruptcy Code preempts Puerto Rico’s Recovery Act.