June 14, 2017 / 11:15 PM / a month ago

Stockton bankruptcy judge among five tapped to mediate Puerto Rico debt fights

3 Min Read

NEW YORK (Reuters) - The five-judge team tapped to mediate a slew of thorny legal fights in Puerto Rico's massive bankruptcy will include the judge who presided over Stockton, California's 2012 bankruptcy and Puerto Rican-born federal Judge Victor Marrero.

Judge Laura Taylor Swain, who is presiding over the bankruptcy, revealed the mediation team in a court order on Wednesday.

The group will be led by Judge Barbara Houser, the chief judge for the federal bankruptcy court in Dallas, and will include Judge Marrero, of the federal court in New York, and Judge Christopher Klein, the Sacramento-based federal bankruptcy judge who oversaw Stockton's restructuring.

Circuit Judge Thomas Ambro, of the Third Circuit U.S. Court of Appeals, and Senior District Judge Nancy Atlas, of the U.S. federal court in Houston, will round out the team.

Puerto Rico, the U.S. territory with $70 billion of debt and a 45 percent poverty rate, in May filed the biggest bankruptcy in U.S. municipal history. The case also promises to be one of the messiest, as already several investors have begun staking competing claims to the island's limited revenue sources.

The biggest fight is between the two largest creditor factions: holders of $18 billion in general obligation debt, which carries a constitutional guarantee, and more than $17 billion of bonds issued by COFINA, Puerto Rico's sales tax authority, backed by the tax revenue COFINA collects.

Both groups say they have an ironclad claim on the COFINA revenue.

Swain, in her order, said participation in mediation

would be voluntary, but that all parties would "be required to engage in good faith in preliminary discussions with representatives of the mediation team."

The team, in turn, would "develop a list of issues to be addressed."

In addition to Stockton, Judge Klein is known for presiding over the 2014 Chapter 11 bankruptcy of that city's Roman Catholic diocese.

Judge Marrero, born in Santurce, Puerto Rico, earned his law degree in 1968 from Yale Law School and has been a judge since 1999.

Reporting by Nick Brown; Editing by Phil Berlowitz

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