Judge Swain
Judge Swain (NYLJ/Rick Kopstein)

Southern District Judge Laura Taylor Swain has been selected to preside over Puerto Rico’s bankruptcy-protection filing, which may lead to the largest municipal debt restructuring in U.S. history.

In a one-sentence order handed down May 5 by U.S. Supreme Court Chief Justice John Roberts Jr., Swain was tasked with overseeing Puerto Rico’s filing for a form of bankruptcy relief from its numerous creditors. Roberts did not explain why he selected Swain in his order.

Swain was an Eastern District bankruptcy judge from 1996 to 2000. After her appointment to the Southern District bench in 2000 by President Bill Clinton, she has presided over major financial criminal cases, including the trial of several former employees of Bernard Madoff and the guilty plea of SAC Capital Advisors. Swain is a 1982 graduate of Harvard Law School.

A provision in the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), signed by President Barack Obama in 2016, handed Roberts the authority to appoint a district court judge to handle the U.S. territory’s bankruptcy-like case, rather than a bankruptcy judge, which is typical in municipal cases.

Puerto Rico is barred under federal law from seeking Chapter 9 protection in a U.S. bankruptcy court. It filed a petition for relief with a U.S. district court in San Juan.

Puerto Rico’s debt-cutting case is expected to be long and complicated. The island is facing some $73 billion in debts, including roughly $18 billion owed by the island’s central government, billions more by various governmental agencies—such as Puerto Rico’s power and water utilities—and sizeable public pension obligations. President Donald Trump has vowed that no federal money will be used to bail out Puerto Rico (The American Lawyer, May 4).