In light of demands from a group of creditors for the full payment of the debt, and after opting to lobby in Washington against the funds claimed by the government of Puerto Rico, governor Ricardo Rosselló warned yesterday that he would have no other recourse than to head for court.
“At this moment they are forcing us to go (to court). There is always room and time. My intention is for this to be a bona fide negotiation, but if they keep going the way the have so far, there is no other option than to head to where I may be allowed to defend the best interests of the Puerto Rican people,” said the governor during an interview at La Fortaleza, flanked by the representative of the government of Puerto Rico in the Oversight Board (OB), Elías Sánchez Sifonte.
This would mean a turn from the path charted by the administration which advocated and hoped to resolve the Puerto Rico debt using Tittle VI of the PROMESA federal law, although they opened the door to Tittle III a little over a week ago. Tittle VI allows for a negotiated agreement between the government and its creditors, whereas Tittle III requires the active participation of a court in a process similar to bankruptcy. According to the governor, Tittle III would prevent bondholders, in a legal suit, from freezing the accounts of the government of Puerto Rico.
“The road is clear on how to proceed. We mustn’t have that fear. Again, our preference is to reach a solution that is rational, but we have already taken steps that are concrete. We have a fiscal plan and some concrete measures where the various sectors have put in their share,” he reiterated.
The governor made his offer to the bondholders, but it was rejected, Sánchez Sifonte confirmed. “The government had an offer which was not put on the table but then, after some work to improve it, the offer was made,” he explained.
Should the government have gone directly Tittle III, instead of attempting to negotiate with the bondholders? This daily asked.
“The government did what it committed to doing: bona fide negotiations. What’s more, the government will continue seeking bona fide negotiations regardless of the venue,” responded Sánchez Sifonte, who rejected that this scenario could have been foreseen “because one hopes for concession to come from both parties and I doubt not that negotiated agreements will be achieved notwithstanding.”
Rosselló assured that negotiations with the bondholders are ongoing. But, likewise, he admitted, at the time of the interview, that only hours remained for a stay provided by PROMESA was set to expire on litigations against the government of Puerto Rico.
“Negotiations continue. We are holding talks, but there is little time left and it’s important (to consider) that if these negotiations fair to start moving toward sensible and reasonable levels, where we may be able to defend the best interests of the people of Puerto Rico, where a rational payment can be achieved, based on the fiscal plan that makes some significant cuts in servicing the debt, well, then they force us to go in only one direction,” warned Rosselló.
“My call is to reason, so that we may sit and reach some agreements,” he continued.
He revealed that some of the creditors demand payment of the debt, in some cases, up to 100% of it and that they have thwarted efforts by the government to obtain funds of the health plan. “There are some who want 100% (of what they lent to the Government, plus interests) or close to that. But, when we have all taken our (share) of sacrifices, (it) is simply irrational and unacceptable to us,” he noted.
He anticipated that “with other groups of creditors” of the government, he foresees “reaching some agreements.”
He recalled that the fiscal plan approved by the OB was already certified last March 13, and imposes cutback of expenses on the government, its employees, and the citizens. Further, the fiscal plan establishes that bondholders will only be paid 20% of what payment of the debt ought to be. That amount is equivalent to $800 million.
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