For municipalities with unsustainable debt loads, there’s always Chapter 9 of the United States Bankruptcy Code. But what do you do if you’re Puerto Rico and you can’t use Chapter 9? Eventually you make your way to the office of Martin Bienenstock, the New York-based head of Proskauer Rose’s restructuring practice.
Puerto Rico carries more than $70 billion in debt, but Bienenstock’s main focus has been $20 billion in debt issued by the commonwealth’s highway, water and electricity authorities. The challenge for him, and for lawyers at Cleary Gottlieb Steen & Hamilton and Puerto Rico’s Pietrantoni Mendez & Alvarez, was to establish a framework for restructuring the debt that did not violate the U.S. Constitution, which bars laws that impair contractual obligations. “We wanted to create a dynamic where the parties sit down and reach a consensual deal,” Bienenstock says.
