"Although a court proceeding will take considerable time and likely involve losses for all Puerto Rico bondholders, it will be an orderly process", Hampton says.
The Island, according to NYT, roughly $120 billion of bond debt, and unfunded pension obligations to restructure, which are weighing down the nation.
Puerto Rico teetered into insolvency Wednesday as the chronically troubled USA territory of 3.4 million citizens buckled under its ever-increasing debt, which stands at $73 billion. Puerto Rico has lost more than 10 percent of its population in that period.
For a time, the strategy worked - but the introduction of ill-advised "Free Trade Agreements" in the 1990s caused those companies to move to low-wage countries, resulting in a high unemployment rate and a "brain drain" as Puerto Rico's best and brightest moved to the mainland, eroding the country's tax base.
On May 3, 2017, the Financial Oversight and Management Board for Puerto Rico (the "Oversight Board"), acting on behalf of the cash-strapped Commonwealth of Puerto Rico (the "Commonwealth"), filed for bankruptcy protection in the District Court for the District of Puerto Rico.
Puerto Rico's financial oversight board filed a debt restructuring petition in federal court Wednesday, the day after several creditors sued over bond defaults, reports Reuters.
Sort of. As a USA territory, the island can not follow the court process used by other US municipal governments such as Detroit.
Puerto Rico's situation is unique in that it's the first US territory to file for bankruptcy.
A legal stay that protected Puerto Rico from lawsuits expired Monday night.
U.S. prosecutors told to push for more, harsher punishments
Scherbak said his post - addressed to U.S. media - was prompted by "this hysteria around my photo shoot at the White House". The White House defended its original arrangement with the Russian Foreign Ministry.
But unlike Detroit, which declared itself broke to force creditors to write off some debt, as a commonwealth, the island has not been able to file for bankruptcy using normal United States financial regulations. In the case of the U.S. Virgin Islands, the government has been shut out of the market altogether, forcing the Mapp administration to cut cost and raise taxes to bolster the government's coffers. The city was able to reach an agreed debt restructuring with stakeholders, in part by soliciting huge contributions from philanthropic foundations so it did not need to sell the city's art collection.
"The governor needed to show that his primary allegiance lies with the citizens of Puerto Rico, and that was the justification for the filing", David Tawil, whose fund, Maglan Capital, held Puerto Rico GO debt before selling it, said.
The legal proceeding does not mean negotiations toward a compromise must stop, Governor Rossello said in a statement on Wednesday.
Under the PROMESA bill, the oversight board and the Title III process were created. Puerto Rico and its general obligation bondholders, whose $18 billion of debt is backed by the island's constitution, were negotiating until the last minute.
Rossello said the debts of some agencies will be restructured in court, while others will be resolved through ongoing negotiations with bondholders.
"Make no mistake: The board has chosen to turn Puerto Rico into the next Argentina", says Andrew Rosenberg, a lawyer at Paul, Weiss, Rifkind, Wharton and Garrison, who is advising some of Puerto Rico's bondholders.
Negotiations revolved around a board-approved fiscal plan that allocates about $787 million a year to creditors for the next decade, less than a quarter of what they are owed. US cities, notably Detroit, have obtained favorable rulings in recent chapter 9 proceedings that helped them chop down obligations to Wall Street.
By declaring bankruptcy, the USA commonwealth in the Caribbean can prevent any interruption in services to island residents, Governor Ricardo Rossello said at a news conference.
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