On August 25, the US Virgin Islands Legislature held a hearing on a bill proposed by the Governor that would authorize the administration to proceed with a proposed refinancing of about $1 billion in outstanding matching fund receipts (MFR) bond debt. Jenner & Block Partner Robert D. Gordon testified against the bill on behalf of two Virgin Islands retiree groups: the St. Croix Government Retirees, or SCGR, and the Government Retirees United for Fairness, or GRUFF. While 11 persons were invited to provide testimony in favor of the bill, Mr. Gordon was the only testifier in opposition to it.
Mr. Gordon argued that the bill seeks to provide significant benefits to the bondholders, including insulating them from any future restructuring process to address USVI’s dire financial condition, while providing immaterial benefits to USVI, its retirees, and citizens. If adopted, he testified, the proposal “would mean that if and when the Government runs out of money and finally engages in a financial restructuring, it will look for concessions (i.e., debt relief) from only the remaining creditors of the Government, not the MFR bondholders. This highlights the problem with a piecemeal approach – it limits the government’s options when it ultimately decides to deal with its creditors in a global fashion. And the largest portion of that remaining debt is owed to retirees.”
“The human cost and tragedy of failing to prioritize these retirees and their dependents and of failing to make good on the Government’s promise to them is unthinkable,” he added.
Certain senators rejected the notion that USVI needs to engage in a comprehensive financial restructuring. However, while the bill was expected to pass, after Mr. Gordon’s testimony, the Legislature instead voted to send the bill to the Finance Committee for further consideration.