Puerto Rico’s Bankruptcy Executives
28 agosto, 2018
They work on the largest restructuring in the history of the U.S. municipal bond market. The table is large enough to feed hundreds of employees and partners of multinational companies and law firms, mostly from outside Puerto Rico. During the first year of the commonwealth's bankruptcy cases, the tab exceeds $220 million.
The main executives that work at these firms and bill as part of the court-ordered process established by the federal PROMESA law exercise a great weight in the decisionmaking related to the future of Puerto Rico. They join another group of executives hired by the commonwealth government and the Fiscal Control Board, whose billing is not approved by the bankruptcy court, yet is directly related to the restructuring of the island's government and public debt.
Many of the lawyers and consultants working on the Puerto Rico case already know each other. They have seen each other in some of the largest bankruptcies and restructurings in the U.S., such as Enron, Lehman Brothers, Refco, Adelphia, Caesars, American Airlines, General Motors and Chrysler, as well as in the major municipal bankruptcies of Detroit, Jefferson County, Alabama, and Orange County, California. This is precisely one of the main arguments used when it comes to justifying the high cost for their services, with some hourly rates that go beyond $1,000.
The government estimates that during the next six years, these professionals—Puerto Rico's bankruptcy executives—will cost more than $1.4 billion. Every single cent will be paid out of the bankrupt territory's coffers.
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