Davis Polk is advising an ad hoc group of bondholders who hold approximately $1.1 billion of bonds issued by the Government Development Bank of Puerto Rico (“GDB”) in a restructuring of approximately $7.6 billion of GDB’s liabilities, including $3.7 billion of GDB bonds. On May 15, 2017, Puerto Rico’s Governor Ricardo Rosselló announced that the Fiscal Agency and Financial Advisory Authority (“AAFAF”, for its Spanish acronym) and GDB had entered into a restructuring support agreement (“RSA”) with certain GDB bondholders holding a substantial portion of GDB’s bond debt, including the ad hoc group, a group of more than 40 local credit cooperativas, and local bondholders represented by Bonistas del Patio.

Under the RSA, the agreed terms of the restructuring of GDB will be consummated pursuant to a consensual modification for GDB under the recently enacted Title VI of The Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”). The terms of the restructuring provide for the exchange of financial creditors’ claims against GDB for one of three tranches of new bonds, at each creditors’ election, issued by a new municipal entity. The tranches of new bonds will have varying face amounts, collateral priority and coupon payments.

GDB is a public corporation and government instrumentality of the Commonwealth of Puerto Rico, which has acted as financial adviser to and fiscal agent for the Commonwealth and its instrumentalities, public corporations and municipalities. GDB has also provided interim and long-term financing to the Commonwealth and its instrumentalities, public corporations and municipalities, and to private parties for economic development.

The Davis Polk insolvency and restructuring team includes partners Donald S. Bernstein and Brian M. Resnick and associates Angela M. Libby and Jordan Weber. The litigation team includes partner Benjamin S. Kaminetzky and associate Marc J. Tobak. The capital markets team includes partner Nicholas A. Kronfeld. Partner Lawrence E. Wieman is providing credit advice. Partner Lucy W. Farr and counsel Leslie J. Altus are providing tax advice. All members of the Davis Polk team are based in the New York office.

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