Muni Restructuring Firm Formed by Ex-Citi Bankers Is Dissolving

(Bloomberg) -- BGC Partners Advisory, a boutique restructuring firm started in 2024 by ex-Citigroup Inc. public finance bankers, is dissolving.

Puerto Rico’s financial oversight board, which manages the island’s spending and the bankruptcies of its government agencies, was a key client for BGC and received a notice from the firm of its plans to dissolve. A person with direct knowledge of the matter who asked not to be named discussing the situation confirmed BGC’s dissolution.

“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,” Matthias Rieker, a board spokesperson, said in an email. “The oversight board does not expect that BGC’s decision will have any impact on the Prepa debt restructuring,” Rieker said, referring to Puerto Rico’s Electric Power Authority.

David Brownstein, the former head of Citi’s now defunct public finance department who worked on the biggest bankruptcies in the municipal market, and former Citi colleagues John Gavin and James Castiglioni formed BGC in January 2024. BGC didn’t provide a comment on the matter.

BGC’s disbanding comes after its most recent contract with the financial oversight board ended on June 30, according to the latest engagement letter between the firm and the board. BGC in September submitted to Puerto Rico’s bankruptcy court its final application for compensation that covered fees and expenses through the end of that month, according to the court filing.

Prepa, the island’s government-owned power utility, has been in bankruptcy since 2017. Bondholders and the oversight board have yet to reach an agreement on how to reduce nearly $9 billion of outstanding debt. The bankruptcy’s progress stalled last year as the court is seeking to resolve a dispute between bondholders and the board regarding Prepa’s revenues before debating any restructuring proposal. That shift drastically reduced BGC’s workload.

BGC faced criticism on social media in August when far-right activist Laura Loomer highlighted the group’s $850,000 monthly retainer. The Trump administration fired most of the board’s members at that time, citing the island’s prolonged bankruptcies. Yet the panel’s workouts have slashed $55 billion in creditor payments over 40 years. Three members sued to be reinstated and a judge in October ruled they could continue their work on the board while the case continues.

Huntington hire

Castiglioni, a former head of financial structuring at Citi, joined Huntington National Bank as a managing director in its New York City office on Monday, according to Samantha Costanzo, the bank’s head of public finance. 

Castiglioni worked at Citi for nearly 14 years, including five years as a director where he helped execute more than 50 municipal debt transactions totaling a combined $50 billion, according to his LinkedIn page.

At Huntington, Castiglioni will be a senior banker covering clients throughout the US and provide financial modeling expertise to the team, according to Costanzo.

“James brings significant experience working with some of the largest and most complex issuers in the U.S. and will help us continue to deepen and expand our client coverage,” Costanzo said in an email.

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