By Maria Chutchian

(Reuters] – Puerto Rico’s five-year-old debt restructuring case has ended. The judge in charge of the matter approved a debt adjustment program that will help to revitalize Puerto Rico’s economy as well as reduce Puerto Rico’s $135 billion debt.

U.S. District Court Judge Laura Taylor Swain accepted the plan and filed an order on Tuesday. It brings to an end nearly 10 years of litigation regarding Puerto Rico’s financial situation. Also, it marks the historic milestone for U.S. municipal debt restructuring.

Puerto Rico applied for bankruptcy protection in Title III (May 2017). The $135 billion of liabilities it had included over $55 billion worth of unfunded pension obligations. Federally appointed financial supervision board proposes a debt adjustment plan that includes settlements with a range of creditors. The goal is to stimulate new investment to support the island’s economy.

According to the board’s estimates, the plan would reduce bond debt of $33 billion to $7 billion. It also cuts total debt by 80%. There are also protections in place to restrict the amount Puerto Rico can borrow.

Legal fees for the case have risen to approximately $1 billion.

Swain observed in Tuesday’s decision, that the plan received “broad but no universal support.” Many public workers and retired people have criticized certain aspects.

According to the oversight board, many government retirees will still be able to get their pensions at current levels under the plan. The plan does not include defined-benefit retirement plans that covered tens to thousands of judges and teachers.

On Tuesday, the board released a statement saying that while it was pleased with Swain’s decision, “the commonwealth must continue to reform itself in order to ensure a prosper future.”

In the years preceding 2017, Puerto Rico had accumulated unsustainable debt levels. Puerto Rico Oversight, Management and Economic Stability Act, a law allowing the government to regulate the debt of the territory, was passed in 2016.

After filing for Title III protection after Hurricane Maria devastated the island and killed approximately 3,000 people, the troubles of this commonwealth reached new heights. The scandal surrounding offensive chat messages as well as government corruption which rocked the island led to its governor being forced out of office in 2019.

It is anticipated that the debt adjustment plan will be in effect by March 15. The oversight board will continue to exist until Puerto Rico achieves four years consecutively of balanced budgets.

Natalie Jaresko was the executive director of this board and stated that, with approval of her plan, she expected a “substantial rise” in spending by government on public services.