By Nick Brown
(Reuters) - The chief mediator in Puerto Rico's massive bankruptcy set an initial meeting with the U.S. territory and its creditors for July 12, saying it would be introductory, rather than substantive.
Federal Judge Barbara Houser, speaking at a court hearing in San Juan on Wednesday, said the meeting would be mandatory for Puerto Rico's stakeholders, though mediation itself will be voluntary.
The meeting will take place in New York, Houser said, adding that "I ask all involved in or infected by these cases to trust me when I say my team and I will work tirelessly" to facilitate settlements in Puerto Rico's complex - and likely expensive - bankruptcy.
Battling a crisis marked by $70 billion in debt, a 45 percent poverty rate and near-insolvent public health and pension systems, Puerto Rico last month filed the biggest bankruptcy in U.S. municipal history.
As scores of stakeholders with competing interests fight for limited paybacks, the case is expected to cost hundreds of millions of dollars in legal and professional fees.
The federally-appointed board in charge of managing the island's finances added even more uncertainty late on Tuesday, when it rejected a proposed debt restructuring between Puerto Rico's power utility, PREPA, and creditors holding some $9 billion in debt.
In a statement, the board said it "decided that the proposed agreement was not in Puerto Rico’s best interests because, ultimately, it did not support the structural and operational reforms required to attract additional capital to PREPA."
The board said its decision "closes the door" on the parties' request to effect the deal consensually under PROMESA, the federal Puerto Rico rescue law passed last year.
Instead, "the most likely course of action under the circumstances would be a debt restructuring" under the section of PROMESA that provides for an in-court, bankruptcy-like workout, the board said.