Puerto Rico turns to courts for debt protection

Puerto Rico: Workers strike over mass cuts

Puerto Rico: Workers strike over mass cuts

According to the US Census Bureau, 46 percent of Puerto Rico's residents live below federal poverty levels, compared to the national average of 14 percent and 36 percent in Detroit. Because Puerto Rico is an unincorporated territory, it's not eligible for Chapter 9 bankruptcy protection like other United States jurisdictions.

It set up a bankruptcy-like process tailor-made for Puerto Rico.

By contrast, Puerto Rico is struggling with a public debt burden totaling $74 billion of outstanding bonds and $49 billion owed for pensions.

A maze of government-issued bonds through various taxing authorities and revenue streams complicated attempts by Puerto Rico to settle with bondholders. Puerto Rico already faced about a dozen lawsuits before the litigation freeze was implemented as part of a rescue package that U.S. Congress approved a year ago.

Rossello said one of the lawsuits sought to claim all revenues generated by the island's Treasury Department for bondholders. While the USVI's overall tax-supported debt at $2 billion is much lower than Puerto Rico's $53 billion in tax-supported debt, per capita debt is about a third higher: $19,000 in the USVI compared with $12,000 for Puerto Rico.

Another concern is Puerto Rico's Medicaid program.

"It is my hope that the Government's Title III proceedings will accelerate the negotiation process", Rossello said.

"At least essential services would be guaranteed", he said. Unless negotiations result in a consensual.

Conrad Hilton arrested in Hollywood Hills for allegedly violating restraining order
Olympic community, and devastating those who had known Holcomb for the entirety of his two-decade career in sliding. He was arrested in June 2015 for violating the restraining order, after police found him inside Daily's home.

Instead, the governor of Puerto Rico, Ricardo Rosselló, petitioned for relief under Title III of a new federal law for insolvent territorial governments, called Promesa. It would give Puerto Rico the legal ability to impose drastic discounts on creditor recoveries, but could also spook investors and prolong the island's lack of access to debt markets.

As businesses and people say goodbye to Puerto Rico, there's even less money to pay back creditors.

"Puerto Rico has been living on borrowed time", said Brad Setser, senior fellow at the Council on Foreign Relations.

Representatives for the Puerto Rican government and the oversight board had no immediate comment.

But "unlike Detroit, there isn't billions of unencumbered artwork to fund a restructuring" in Puerto Rico, said David Tawil, whose fund, Maglan Capital, held Puerto Rico general obligation debt but has since sold it. By comparison, the USA city of Detroit had $9.3 billion of obligations when it filed for bankruptcy in 2013 in the biggest US municipal bankruptcy ever.

Unlike states, Puerto Rico is not allowed to restructure its debt under Chapter 9 bankruptcy.

He also noted that that the government has to walk a fine line with bondholders amid negotiations.

"It's going to be uncomfortable for some", Barbarosh said. "Where that sweet spot is, nobody exactly knows". Bondholders rejected the offer. As of September 30, Puerto Rico and its various bond issuing authorities had missed almost $1.5 billion in debt service payments.

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