Puerto Rico Makes Unprecedented Move To Restructure Billions In Debt

The case was filed under Title III of the PROMESA law, which allows an in-court debt restructuring process akin to US bankruptcy protection.

The move comes a day after several major creditors, including usurious hedge funds with "vulture fund" reputations, sued Puerto Rico over defaulting on its bonds.

With $70 billion in debt, a 45 percent poverty rate and near-insolvent public health and pension systems, a torrent of litigation could force Puerto Rico into a so-called Title III proceeding - an in-court debt-cutting process similar to US bankruptcy.

It is too early to say what kind of impact a debt restructuring in court will have on the 3.4 million people that remain on the island, economist Jose Joaquin Villamil told The Associated Press. The step toward bankruptcy-like proceedings, under a federal judge, intensified complaints that Puerto Rico has lost all control of its own future.

More news: Ravens Bolster Secondary by Drafting Alabama's Marlon Humphrey

The case isn't formally called bankruptcy because Puerto Rico is barred from using Chapter 9, which is usually used by local governments seeking protection.

"The result is that Puerto Rico can no longer fully pay its debt and pay for government services". Although a court proceeding will take considerable time and likely involve losses for all Puerto Rico bondholders, it will be an orderly process that should be better for creditors in the aggregate than a chaotic and uncertain period involving proliferating lawsuits among holders of the commonwealth's numerous debt types.

Rep. Nydia Velázquez, D-N.Y., who was born and raised in Puerto Rico, said that thanks to the law, the territory has the tools it needs to climb out of its crisis.

"I'm not going to allow that to happen", he said.

More news: JuJu Smith-Schuster: JuJu Smith-Schuster goes to Steelers at 62

Analysts have been speculating that the island would have no choice but to have a court oversee its debt restructuring, given the unprecedented challenge of striking a voluntary agreement with so many creditors.

A maze of government-issued bonds through various taxing authorities and revenue streams complicated attempts by Puerto Rico to settle with bondholders. We have a financial crisis that is suffocating the people - working class families, students, everyone." added Soto "The Island is losing a doctor everyday while fighting Zika, and facing a 12.4 percent unemployment rate, school closings and other merciless austerity measures. Nor did it have a big effect on Puerto Rico bonds: a commonwealth general obligation with an 8 percent coupon, one of the island's most-actively traded securities, changed hands for an average of 65.2 cents on the dollar Thursday, up from 64.7 cents on Tuesday, ahead of the court filing.

Puerto Rico's situation is not dissimilar to Detroit's, which was the culmination of years of economic stagnation and bad policy. Gov. Rossello announced on Wednesday, May 3, 2017, a historic restructuring of a portion of the US territory's $70 billion debt through courts after negotiations with bondholders failed.

A fiscal plan sets aside $800 million a year for debt payments, a fraction of the $35 billion due in interest and payments over the next decade.

More news: Planting progress and implications for corn and soybean acreage

The island has been mired in recession for over 10 years, causing many Puerto Ricans to migrate to the 50 states.


Popular
  • Tesla Ousts Executive For Clashing With Elon Musk Over Direction Of Company

    Tesla Ousts Executive For Clashing With Elon Musk Over Direction Of Company

    In addition to dozens of tunnels for cars, they would ideally also build an underground hyperloop mass transit system. That will be controlled autonomously by the overarching tunnel system, and carry the auto to its destination.
    Hot Switch sales boost Nintendo sales, trim quarterly loss

    Hot Switch sales boost Nintendo sales, trim quarterly loss

    The first weekend sales of the Switch were better than any other console in the Japanese gaming giant's history. The new system will boast the same size screen as the 3DS XL systems, which are bigger than the regular 3DS.
    Cowboys target D as expected with Michigan's Taco Charlton

    Cowboys target D as expected with Michigan's Taco Charlton

    This is a great opportunity for the Cowboys to add to their defense as they did in Round 1 when they selected Taco Charlton. Michigan's Taco Charlton, one of the best names in this year's class, is the pick for America's Team at No. 28 overall.
  • Ubisoft teases a New Far Cry game

    Ubisoft teases a New Far Cry game

    The first Far Cry game was remastered by Ubisoft Pune as Far Cry Classic for the Xbox 360 which was met with a mixed reception. Yesterday, Ubisoft France posted a shot of Far Cry 3's Rook Islands on their Facebook page .
    US general in Afghanistan suggests Russia arming Taliban

    US general in Afghanistan suggests Russia arming Taliban

    Trump as president was that they thought he would take a businessman's approach to America's portfolio of engagements overseas. It went on to say the assault on the army base was a prelude to its coming "spring offensive" in Afghanistan .
    A New Look at the iPhone 8 Design

    A New Look at the iPhone 8 Design

    Also, the technology on which it is based, the OLED screen of iPhone 8 will consume less energy due to the lack of backlight. Early iPhone 8 rumors suggested the iPhone will feature wireless charging powers unlike anything now seen on mobile devices.
  • NFL Draft nabs second biggest viewership for ESPN, NFL Network

    NFL Draft nabs second biggest viewership for ESPN, NFL Network

    The NFL allows five minutes per pick in rounds four through seven, and then four minutes per compensatory pick in all rounds. Reddick in Round 1 and safety Budda Baker in Round 2 were great scheme fits for a Cardinals defense that prizes versatility.
    Hill settles on $1T spending bill, vote likely by Wednesday

    Hill settles on $1T spending bill, vote likely by Wednesday

    The deal includes $1.3 billion to extend health insurance benefits for more than 22,000 retired mine workers and their widows. The news that Congress reached a deal to avert a shutdown helped send stocks rising in Asia and in early United States trade.
    Now we're cooking-the Assistant on Google Home is your secret ingredient

    Now we're cooking-the Assistant on Google Home is your secret ingredient

    If you want to use the Assistant on an Android device, you'll end up following the same process phone makers go through. It'll know you're cooking and move forward with the recipe regardless of whatever else you ask it between steps.
  • 3 civilians killed in militant gun battles

    3 civilians killed in militant gun battles

    The statement further added that a child was killed and three civilians including two children were wounded during the clash. Additional troops and expanded authorities are needed to provide advisory support to Afghan forces, the report finds.
    NSA Ignored Law Change, Collected US Citizens' Phone Records

    NSA Ignored Law Change, Collected US Citizens' Phone Records

    They said they had no breakdown of how many individuals' phone records were among those collected. This is the first report that assesses the effects of the 2015 Freedom Act.
    Chipotle Reveals Payment System Data Breach (Will Also Start Selling Dessert)

    Chipotle Reveals Payment System Data Breach (Will Also Start Selling Dessert)

    Chipotle immediately launched an investigation and believe it has stopped the unauthorized activity. Payment card network rules generally state that cardholders are not responsible for such charges.

CONNECT