Madagascar Development

 Doral Financial Corp., the Puerto Rico bank engulfed by legal scrutiny and FBI probes, was seized by regulators after tumbling 94 percent in the past year. Puerto Rico’s financial regulator shuttered the bank on Friday, according to a statement from the the Federal Deposit Insurance Corp., which was appointed receiver. Popular Inc. agreed to acquire the banking operations of the seized firm, including deposits, and operate eight of Doral’s 26 former branches. Agreements were reached with three banks to acquire the other 18 locations. “Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage,” the FDIC said. Doral, the commonwealth’s second-largest bank, struggled to survive after the FDIC notified the lender last year that it couldn’t use a $229 million tax refund as part of its Tier 1 capital. Regulators said earlier this month that Doral continues to be “critica...

Washington, DC —As the House Judiciary Committee’s Subcommittee on Regulatory Reform, Commercial and Antitrust Law prepares to hold a hearing today on H.R. 870, the Puerto Rico Chapter 9 Uniformity Act of 2015 , Resident Commissioner Pedro Pierluisi highlighted the broad-based support that has emerged for the legislation.  H.R. 870 would empower the government of the U.S. territory of Puerto Rico to authorize one or more of its government-owned corporations to restructure their debts under Chapter 9 of the federal Bankruptcy Code if they become insolvent, as all state governments are already empowered to do under current federal law. Three of the four witnesses at the hearing will testify in support of H.R. 870, namely John Pottow, Professor of Law at the University of Michigan Law School; Robert Donohue, Managing Director of Municipal Market Analytics; and Melba Acosta, the President of the Puerto Rico Government Development Bank (GDB). Moreover, the House Judiciary Committee ha...

Washington D.C.—Congressman Tom Marino, PA-10, Lycoming County held a hearing on H.R. 870, the “Puerto Rico Chapter 9 Uniformity Act of 2015”  in the Subcommittee on Regulatory Reform, Commercial and Antitrust Law. If passed, the legislation would provide the government of Puerto Rico with the same authorization state governments currently have by allowing it to permit Puerto Rican municipalities  to restructure their debts under Chapter 9 of the federal Bankruptcy Code in the event of insolvency. Witnesses testifying before committee members were: ·         Mr. John A. E. Pottow, Professor of Law, University of Michigan Law School ·         Ms. Melba Acosta, President, Government Development Bank of Puerto Rico ·         Mr. Robert Donahue, Managing Director, Municipal Market Analytics ·         Mr. Thomas Moers M...

Puerto rico's debt-laden power authority, Prepa, said on Friday that it will hold off on presenting a restructuring plan to creditors as it continues to negotiate an extension of forbearance agreements with bondholders and lenders. The current agreement, which expires on March 31, had called for a deadline of this Monday for Prepa to unveil a proposal to restructure about $9 billion in debt. But it will miss that deadline, Lisa Donahue, Prepa's chief restructuring officer, said in a statement. (Reporting by Megan Davies and Nick Brown; Editing by Bernard Orr) Puerto Rico's Prepa to miss restructuring deadline

Popular and FirstBank gained critical branches and deposits in a region where growth is hard to come by. Some observers said it could also benefit the island to have one less competitor. by Jackie Stewart Doral s Failure Instantly Reshapes Puerto Rico s Banking Industry

Standard & Poor's Ratings Services lowered its rating on Puerto Rico Infrastructure Financing Authority's series 2011B and 2011C revenue bonds (the port authority project) (Government Development Bank for Puerto Rico letter-of-credit-backed U.S. public finance issue) to 'B-' from 'BB-'. Puerto Rico Infrastructure Financing Authority Lowered To B- 

WASHINGTON , Feb. 27, 2015 /PRNewswire-USNewswire/ -- Puerto Rico's overall manufacturing sector reported $76.6 billion in total value of shipments for 2012, down 4.5 percent from $80.2 billion in 2007, according to the U.S. Census Bureau's Economic Census of Island Areas. The total number of manufacturing establishments in Puerto Rico in 2012 was 1,653, down 23.2 percent from 2,151 establishments in 2007. Similarly, the number of manufacturing employees fell 24.3 percent, from 110,691 in 2007 to 83,830 in 2012. Payroll also decreased 16.8 percent, from $3.5 billion to $2.9 billion , over the same period. Chemical manufacturing ( NAICS 325 ) remained the leading manufacturing subsector in Puerto Rico , rising from 64.9 percent of total manufacturer's shipments in 2007 to 68.1 percent in 2012. The value of chemical shipments increased only 0.1 percent to $52.1 billion in 2012. However, employment decreased 43.4 percent, from 30,841 in 2007 to 17,466 in 2012. As in pre...

Puerto Rico's debt-laden power authority, Prepa, said on Friday that it will hold off on presenting a restructuring plan as it tries to secure an extension of an agreement from creditors not to foreclose on its $9 billion in debt. The current agreement, which expires on March 31, had called for a deadline of this Monday for Prepa to unveil a proposal to restructure about $9 billion in debt. But it will miss that deadline, Lisa Donahue, Prepa's chief restructuring officer, said in a statement. "We have made significant progress" to negotiate an extension of the forbearance agreement, "but there is more work to do and as a result, we have not yet finalized a plan to present to the forbearing creditors." Donahue said she told creditors Prepa "would not satisfy this milestone," and that creditors do not plan to call a default as a result of the delay. Reuters reported on Thursday that Prepa would likely miss the deadline as negotiators weigh droppi...

Doral Financial, the troubled Puerto Rico bank that was once a darling of Wall Street before becoming known as a political pariah on the island, has been shut down by banking regulators. The Federal Deposit Insurance Corporation expects to lose about $748.9 million from Doral’s collapse, making it the most costly bank failure since April 2010, when another Puerto Rican bank collapsed. The collapse of Doral, which had experienced eight consecutive years of losses and has been ensnared in a murder investigation into the shooting of a top bank executive, seemed all but inevitable. Still, the takeover of the bank on Friday afternoon was marred by the F.D.I.C.’s early release of an emailed announcement that the bank had been closed. The email was sent more than an hour before many of the bank’s branches had closed and while Doral’s stock was still trading on the New York Stock Exchange. Immediately after the release, Doral’s shares, which had already been battered in recent months, tumb...

Chairman Goodlatte: Chairman Goodlatte: In 1984, Congress passed the Bankruptcy Amendments and Federal Judgeship Act that, among other things, defined the term “State.”  Contained in this definition is the exclusion of Puerto Rico from chapter 9 of the Bankruptcy Code.  While the text of this provision is clear, the rationale underlying the exclusion is not. Today’s hearing will revisit the 1984 definition and reevaluate the merits of providing Puerto Rico access to chapter 9 of the Bankruptcy Code under H.R. 870, the Puerto Rico Chapter 9 Uniformity Act of 2015. This legislation is not merely a technical “fix” to the Bankruptcy Code.  Puerto Rico is one of the largest municipal bond issuers in the country, with over $70 billion in outstanding debt.  Additionally, each of its public corporations has issued billions of dollars in municipal bond debt.  If one of Puerto Rico’s public corporations were to file for chapter 9, it would rank among the largest municipa...

Legislation that would allow government-owned corporations in Puerto Rico to reorganize through Chapter 9 may face an uphill battle after drawing a lukewarm reception from Republicans on a House panel Thursday. by Kyle Glazier Republicans Skeptical of Puerto Rico Chapter 9 Bill

WASHINGTON — A bill to give Puerto Rico’s ailing public utilities a way to restructure debt under the U.S. bankruptcy code drew skepticism from congressional Republicans but support from Democrats, who said it would relieve the island’s problems. The Republican-controlled Judiciary subcommittee on regulatory reform of the House of Representatives on Thursday held a hearing on the bill, proposed by Puerto Rico’s nonvoting congressional delegate, Democrat Pedro Pierluisi. The legislation would allow the territory’s government-owned corporations to file under Chapter 9 of the bankruptcy code. Puerto Rico’s electric power authority, PREPA, is struggling with debt of about $9 billion. Subcommittee Chairman Tom Marino of Pennsylvania and Rep. Darrel Issa of California, both Republicans, said they were undecided on whether to support the bill in its current form. “Is it wise to provide this [Chapter 9], even prospectively, without a real plan presented from the Commonwealth of Puerto Rico...

A bill that would give Puerto Rico’s government agencies access to the same bankruptcy protections provided to cities such as Detroit would provide a road map for investors if one or more runs out of money, a senior government official told a U.S. House committee Thursday. Melba Acosta, president of the island’s Government Development Bank, told the panel of the House Judiciary Committee that a bill permitting the island to let its so-called public corporations seek protection under Chapter 9 of the U.S. Bankruptcy Code would help protect public services and plans for long-term growth. Puerto Rico is currently barred from allowing its government entities to use Chapter 9. A recent   decision by a federal judge   to block a local law that would have provided a pathway for the power, water and highway agencies to restructure about $20 billion in debt leaves Puerto Rico in a legal void, creating an uncertain environment that threatens the island’s economic future, she said. That ...

For reasons lost to history, Congress expressly forbids the territory of Puerto Rico from using the municipal bankruptcy provisions of federal law known as Chapter 9. Now that Puerto Rico's public agencies face a debt crisis, U.S. lawmakers are considering a bill that would change the rules in the middle of the game. Excluding Puerto Rico from Chapter 9 serves no discernible public policy purpose. It is perfectly appropriate for Congress to treat Puerto Rico like a state for purposes of municipal bankruptcy law. However, subjecting Puerto Rico's existing creditors — including banks and bondholders — to the law would be unfair. Chapter 9 permits cities, counties and certain state-created corporations to file for federal bankruptcy protection, so long as the state agrees. In recent years, the cities of Detroit and Stockton, Calif., have both used Chapter 9 to restructure debts owed to bondholders and city retirees. A current House bill scheduled for a hearing later this week ...

Following the Standard & Poor's junk rating on Puerto Rico on Feb 12,   Moody's Corporation   ( MCO   -   Analyst Report ) downgraded the rating on the island’s $48 billion debt issues. The company lowered Puerto Rico’s general obligation (GO) rating to Caa1 from B2 on Feb 19. In addition, the credit rating agency downgraded Puerto Rico’s Sales Tax Financing Corp. (COFINA) to B3 from Ba3 and subordinate bonds to Caa1 from B3. Overall, Moody’s maintains a negative outlook on Puerto Rico's all governmental and public corporation debt with most of the security issues rated as junk. This signifies that the country is likely to bear significantly higher cost of debt to access capital markets. Puerto Rico’s Rating Trend So Far For a long time, credit rating agencies, including Moody's and S&P, have been maintaining a negative stance on Puerto Rico. Last year, in July, Moody's Investors Service downgraded the Commonwealth of Puerto Rico to B2 from Ba2 that hit t...

Commonwealth government officials acknowledged in court papers that Puerto Rico Electric Power Authority (Prepa) bondholders as soon as March 31 could take unilateral actions against the utility that could “disrupt the provision of essential public services.” Potential actions include attempting to accelerate Prepa debt payments, suing to increase electricity rates or having a receiver appointed to take over management of the troubled government utility, Puerto Rico Solicitor General Margarita Mercado-Echegaray said in a motion filed late Thursday with the 1st Circuit Court of Appeals in Boston. The motion asked the federal appeals court to expedite its review of Puerto Rico’s appeal of U.S. District Court Judge Francisco Bebosa’s decision that voided the the Puerto Rico Public Corporation Debt Enforcement & Recovery Act (Recovery Act) for violating the Supremacy Clause of the U.S. Constitution. The law was enacted last year to enable financially troubled public corporations to ...

In the aftermath of Moody's deep downgrade of several key Puerto Rico bonds, the United States Treasury said it supported Puerto Rico's progress. BY ROBERT SLAVIN U.S. Treasury Supports Puerto Rico Progress

Puerto Rico has asked a U.S. court for a quick decision in its appeal against a federal court ruling that voided a local   bankruptcy   law, arguing the decision hampers its efforts to deal with a financial emergency that could disrupt basic public services on the Caribbean island. A federal court struck down Puerto Rico's Recovery Act earlier this month in a blow to the U.S. commonwealth's efforts to restructure up to $20 billion in debt at three main public corporations. Puerto Rico passed the act last year because it is excluded from the U.S.bankruptcy   code. In papers filed late on Thursday with the First Circuit Court of Appeals in Boston, Puerto Rico argued the law represented an "emergency response to the most profound fiscal crisis in Commonwealth history." The filing said unilateral action by creditors such as accelerating PREPA's debt repayments, suing to raise electricity rates, or seeking to appoint a receiver would "disrupt the provision of ess...

February 19: A bill that would effectively repeal and replace the tax code in Puerto Rico has been introduced in the Commonwealth’s House of Representatives. House Bill 2329, the Tax System Transformation Act , was filed on February 11, 2015, and is comprehensive tax legislation that would effectively repeal the Puerto Rico Internal Revenue Code of 2011 (“2011 Code”) and purportedly replace it with a new Puerto Rico Internal Revenue Code of 2015 (“2015 Code”), to be generally effective for tax years beginning after December 31, 2015, but with certain provisions effective on or after April 1, 2015. Overview The 2015 Code, as proposed, is a “package proposal” with the purpose of essentially shifting from an income tax based system to consumption tax based system. Among the most notable items, the proposal would: Eliminate a significant number of exemptions, exclusions, and the preferential tax treatment of many items Increase capital gain and dividend tax rates Provide for signi...