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Retirees and pensioners will now have a voice at the negotiating table during Puerto Rico’s bankruptcy, according to a Reuters report. This month, the U.S. Trustee overseeing the filing procedure announced the appointment of a retiree committee.
While retiree committees are usually appointed in municipal bankruptcy filings, it is typically preceded with a formal ruling from the bankruptcy court. However, due to the extreme nature of Puerto Rico’s bankruptcy, the Trustee is acting without a judge’s ruling.
Puerto Rico’s Bankruptcy Overview
For those of you who aren’t aware, Puerto Rico’s bankruptcy is the largest municipal bankruptcy filing in U.S. history. The island territory is suffering high poverty rates, massive unemployment and a breakdown of public health systems.
Puerto Rico’s pension fund is currently nearly 100 percent under-funded, with $50 billion in pension debt. Additionally, it has $70 billion in bond debt.
Puerto Rico’s Retiree Committee
The Trustee’s appointment of a committee without formal court approval reflects a critical situation. Puerto Rico is almost completely unable to pay out benefits on its largest public pensions. This represents the largest pension hole for any U.S. state or territory in history.
What’s more, the federal board overseeing debt-restructuring has called for major cuts to pension funds to cure insolvency. In response, more than 90,000 retirees and pensioners have come together requesting representation during negotiations.
While it seems that the Trustee concurs, it has reaffirmed that the Trustee reserves the Authority to select the members of the retiree committee. According to the Reuters report, the Trustee hopes to have a committee selected by June 16th.
Want to Know More?
If you’d like to know more about Puerto Rico’s bankruptcy and retiree committee-appointment, read the full Reuters article here.
For more bankruptcy news and updates, visit our blog. If you have questions about filing for bankruptcy or bankruptcy procedures, contact us today.