Ex-Citi Bankers’ Restructuring Firm BGC Partners Set to Dissolve

BGC Partners Advisory, a restructuring firm established in January 2024 by former public finance bankers from Citigroup Inc., is dissolving. The firm’s decision comes after its contract with Puerto Rico’s financial oversight board ended on June 30, 2023. This board has been crucial in managing the island’s finances and overseeing bankruptcies of its government agencies.

According to a source familiar with the situation, who requested anonymity, BGC notified the oversight board of its intention to dissolve. Matthias Rieker, a spokesperson for the board, confirmed this development via email, stating, “BGC has informed the oversight board that it intends to dissolve its partnership, and the oversight board will communicate its decision regarding its financial advisor going forward at the appropriate time.” Rieker added that BGC’s dissolution is not expected to impact the ongoing restructuring of Puerto Rico’s Electric Power Authority (Prepa).

David Brownstein, who previously headed Citi’s public finance department, along with former colleagues John Gavin and James Castiglioni, founded BGC to leverage their experience in the municipal market. The firm has engaged in notable projects, but the recent end of its contract with the oversight board significantly reduced its workload. In September, BGC submitted a final application for compensation to Puerto Rico’s bankruptcy court, covering fees and expenses incurred through that month.

Prepa, which has been in bankruptcy since 2017, faces nearly $9 billion in outstanding debt. Efforts to reach an agreement between bondholders and the oversight board have stalled, as the court is currently addressing disputes regarding Prepa’s revenues. This situation has further complicated any restructuring proposals, leading to a decreased demand for BGC’s services.

Criticism of BGC surfaced in August when far-right activist Laura Loomer highlighted the firm’s monthly retainer of $850,000. The Trump administration subsequently dismissed most members of the oversight board due to concerns over the prolonged bankruptcies affecting Puerto Rico. Nevertheless, the board’s actions have resulted in significant debt reductions, totaling $55 billion over 40 years.

While BGC partners have chosen to dissolve, James Castiglioni has transitioned to a new role. Recently appointed as a managing director at Huntington National Bank in New York City, Castiglioni brings nearly 14 years of experience from Citi, where he was instrumental in executing over 50 municipal debt transactions worth a combined $50 billion. Samantha Costanzo, Huntington’s head of public finance, noted in an email that Castiglioni will enhance the bank’s client coverage and provide valuable financial modeling expertise.

The dissolution of BGC Partners Advisory marks a significant shift in the landscape of municipal finance consulting in Puerto Rico, leaving stakeholders to navigate the complexities of ongoing financial restructurings without this key player.