PR event

3 May 2017 By Richard Beales Follow @richardbeales1

Congress gave the U.S. territory access to a form of bankruptcy. Now the board overseeing its finances, encompassing $70 bln of debt, has pressed the button. Creditors will get their day in court, and tidy plans in spreadsheets could end up as warped as in Detroit – or worse.

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Puerto Rico announced a historic restructuring of its public debt on May 3, touching off what may be the biggest bankruptcy ever in the $3.8 trillion U.S. municipal bond market.

While it was not immediately clear just how much of Puerto Rico's $70 billion of debt would be included in the bankruptcy filing, the case is set to dwarf Detroit's insolvency in 2013.

The move came a day after several major creditors sued Puerto Rico over defaults its bonds.

The debt-restructuring petition was filed by Puerto Rico's financial oversight board in the U.S. District Court in Puerto Rico under Title III of last year's U.S. congressional rescue law known as PROMESA.

Title III allows for a court restructuring process akin to U.S. bankruptcy protection. Puerto Rico is barred from a traditional municipal bankruptcy protection under Chapter 9 of the U.S. code.

Context News

Puerto Rico announced a historic restructuring of its public debt on May 3, touching off what may be the biggest bankruptcy ever in the $3.8 trillion U.S. municipal bond market.

While it was not immediately clear just how much of Puerto Rico's $70 billion of debt would be included in the bankruptcy filing, the case is set to dwarf Detroit's insolvency in 2013.

The move came a day after several major creditors sued Puerto Rico over defaults its bonds.

Title III allows for a court restructuring process akin to U.S. bankruptcy protection. Puerto Rico is barred from a traditional municipal bankruptcy protection under Chapter 9 of the U.S. code.

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