On February 28, 2020, the Financial Oversight and Management Board for Puerto Rico filed its amended proposed plan of adjustment for the Commonwealth of Puerto Rico (the “Amended Proposed Plan”) and a related disclosure statement. At this time, the Amended Proposed Plan is only a proposal and has not been approved by the district court.

Similar to the Oversight Board’s initial proposed plan filed on September 27, 2019, which provided recoveries of up to 1.8% for general unsecured creditors, the Amended Proposed Plan provides general unsecured creditors with completely unacceptable recoveries of a mere 3.9%. Even worse, the Amended Proposed Plan is based on a settlement between the Oversight Board and certain hedge funds holding unsecured Commonwealth and Commonwealth-guaranteed bonds (“GO Bonds”) under which these bondholders would receive recoveries of upwards of 77%. Click here for more from the Committee on why this bondholder settlement is such a bad deal for unsecured creditors and for Puerto Rico.

The Committee intends to vigorously oppose the proposed treatment of general unsecured creditors under the Amended Proposed Plan and intends to do everything it can to obtain better recoveries for unsecured creditors. The Committee will provide further updates on its website regarding the Amended Proposed Plan and the confirmation process. The Court has currently reserved dates for a hearing on the confirmation of the Amended Proposed Plan in later October and early November.

*NOTHING CONTAINED HEREIN CONSTITUTES THE SOLICITATION OF VOTES FOR THE ACCEPTANCE OR REJECTION OF A TITLE III PLAN OF ADJUSTMENT WITHIN THE MEANING OF SECTION 1125 OF THE BANKRUPTCY CODE, AS APPLICABLE TO TITLE III OF PROMESA. NO SUCH SOLICITATION SHALL OCCUR PRIOR TO APPROVAL BY THE COURT, IN ACCORDANCE WITH PROMESA, OF A DISCLOSURE STATEMENT WITH RESPECT TO SUCH TITLE III PLAN OF ADJUSTMENT.