But if they lost — if the court confirmed that their bonds were invalid — those bondholders would get nothing.Those bondholders said the board’s offer amounted to illegal discrimination and vowed to sue. Vermont. Under the new agreement, the debt would be settled for $10.7 billion, with $3.8 billion up front.José Carrión, the chairman of the oversight board, called the deal “a win for The deal still requires the approval of Puerto Rico’s Legislature, but it would provide for holders of the island’s general-obligation bonds to exchange them for a combination of cash and new debt. Puerto Rico first defaulted on its general obligation bonds in July 2016, when it failed to pay roughly $1 billion owed to its creditors and hasn't made any payments since. Puerto Rico Bondholders Reach Tentative Deal With Oversight Board Pact raises recovery for newer general obligation bonds, moving the U.S. territory closer to bankruptcy exit The Puerto Rico Oversight Board's move to declare null $6 billion of general obligation bonds may itself be illegal, according to two attorneys following the case.

But the island has also benefited from a flurry of post-disaster rebuilding, which has led to more business-income tax revenue than expected.The oversight board, which was set up in 2016, has also engaged in strong-arm negotiations, including challenging the supremacy of general-obligation creditors, who are accustomed to being paid first.It also said general-obligation bonds brought to market starting in 2012 had exceeded the territory’s debt limit While angry bondholders threatened lawsuits, the board used that threat as leverage. "Not one word of the PSA (Plan Support Agreement) is considered acceptable to AAFAF," Christian Sobrino Vega, the CEO and president of the Puerto Rico Fiscal Agency and Financial Advisory Authority said in the statement. She has scheduled hearings on the plan for October.Puerto Rico Reaches Deal to Settle $35 Billion in DebtA protester at Puerto Rico’s Capitol building last month. AAFAF is the acronym for the agency's name in Spanish. Texas. Among them were Aurelius Capital Management, which has pursued aggressive litigation strategies in other debt meltdowns, most famously in Argentina, where the lawsuits took years to resolve.Those suits were put on hold after the judge presiding over Puerto Rico’s bankruptcy, Laura Taylor Swain, ordered both sides into mediation.The agreement grew out of those talks, and it will give all three groups of general-obligation bondholders better recovery rates. That should help prevent the kind of budget deficits that led the island to borrow too much in the past, said Natalie Jaresko, the executive director of the federal oversight board.“We are doing a great deal in these agreements to protect the people of Puerto Rico,” she said.Although the agreement removes another of the roadblocks facing the island as it tries to claw its way out of debt, a number of hurdles remain.The agreement does not include bonds issued by Puerto Rico’s power authority or the other bodies that provide drinking water and public works on the island. And, on Wednesday, the oversight board announced a tentative deal to restructure more than $50 billion in unfunded pension liabilities.Got a confidential news tip? "And we can confidently state that no legislation, executive action or other administrative approval required from the Government of Puerto Rico will be taken to implement an agreement that directly or indirectly supports a Plan of Adjustment that cuts payments to our retirees," Sobrino Vega said.The island's oversight board has been making some progress in 2019 after being appointed in 2017 to oversee the $73 billion restructuring, which is the largest in the history of the U.S. municipal bond market.In February, U.S. District Judge Laura Taylor Swain, who is overseeing the record bankruptcy-like proceedings, approved a deal to restructure about $17 billion of sales tax backed bonds, known as COFINA for the Spanish acronym. Those who were initially promised 64 cents on the dollar would get 74.9 cents, those offered 45 cents would get 69.9 cents, and those offered 35 cents would get 65.4 cents.The deal must still be incorporated into the overall debt-adjustment plan that requires Judge Swain’s approval. Puerto Rico's default Friday marks the first time that a state or state-like entity (Puerto Rico is a U.S. territory) has failed to pay general obligation bonds since the Great Depression. Puerto Rico has reached a deal with creditors who hold $35 billion in its general obligation bonds, passing an important milestone as it tries to resolve its $129 billion debt crisis..


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