News

"Puerto Rico discovers that bankruptcy is expensive" (The Washington Post)

Puerto Rico has discovered that bankruptcy is expensive.

Lawyers asked a U.S. District Court overseeing the commonwealth’s bankruptcy case to approve $75 million in funds for legal and consulting fees and another $2 million in expenses. And that covers May 3 through Sept. 30, the first five months of the case. Another five months have passed since then.

One of the biggest bills came from firms working for the federal oversight board — charged by Congress with monitoring and imposing fiscal discipline on Puerto Rico.

Judge Laura Taylor Swain, the federal judge overseeing the bankruptcy case, approved less than $50 million of the charges and is still reviewing the rest. But she warned the lawyers that the restructuring of Puerto Rico’s $72 billion in debt was in its “infant” stages. Swain said the people of Puerto Rico could not afford to spend “billions of dollars” on fees and added that the lawyers should come up with ways to keep legal costs under control.

A report by a fee examiner for the court sharply criticized the law firms and their clients for needlessly duplicating tasks.

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