SAN JUAN, Puerto Rico (AP) Puerto Rico's governor has announced a historic restructuring of a portion of the US territory's $70B debt through courts after negotiations with bondholders failed.
"This is much bigger and much more complex than Detroit", Sanchez said, adding that he estimates the process could be completed within four years.
Puerto Rico's restructuring will be the biggest in municipal-bond market history, vastly larger than Detroit's $18 billion record bankruptcy, and will mark the first time a state-level issuer has had debt written off in federal court.
Chairman of the Oversight Board José Carrión said the filing was made to "provide a method for the Commonwealth and its instrumentalities to achieve fiscal responsibility and access to the capital markets, " according to a press release. With the May 1 deadline passed, Puerto Rico is now vulnerable to legal challenges by creditors, with one lawsuit filed early Tuesday morning.
Promesa, signed into law last June, includes an oversight board aimed at helping the island manage its public finances. Mr. Rosselló said he hoped the move to bankruptcy court would "accelerate the negotiation process". Title III, which is similar to the Chapter 9 bankruptcy, allows Puerto Rico and other USA territories to restructure their debt under the supervision of a federal judge.
Indian Company Royal Enfield Plans to Own Ducati
Other companies in the fray may include Suzuki, Honda, Polaris, Harley Davidson , the report said. Volkswagen , Ducati , Hero MotoCorp nor Royal Enfield have commented on this so far.
Ricardo Rossello said Wednesday that federal courts would help protect the US territory from its more than $70-billion debt crisis, after multiple creditors filed lawsuits trying to recuperate millions of dollars invested in government bonds.
The legal proceeding does not mean negotiations toward a consensual restructuring agreement must stop though, the governor said.
"It will be an orderly process that should be better for creditors in the aggregate than a chaotic and uncertain period involving proliferating lawsuits", said Moody's Investor Services analyst Ted Hampton.
Puerto Rico, owing $73 billion to creditors, filed for a form of bankruptcy protection Wednesday.
"Title III was especially compelled by the commonwealth's need to restructure $49 billion of pension liabilities", the oversight board said in Wednesday's filing. Per capita debt is more than a third higher than Puerto Rico's, the economy has contracted by significantly more, and both territories were borrowing to fill long-time massive budget gaps.
BCCI asked to pick squad for Champions Trophy
BCCI's current joint secretary, Amitabh Choudhary, has been given the task of cracking a deal with the ICC on its behalf while keeping the legal options open.
Puerto Rico has over $70 billion in bond debt and $50 billion in pension obligations.
The previous largest US public bankruptcy, Detroit's in 2013, covered some $18 billion in debt.
Puerto Rico estimates it has about $800 million a year available for debt servicing, far below the $3.2 billion now required.
Puerto Rico, whose government owes more than $70 billion in bond debt, also has almost $50 billion in pension liabilities as a outcome of a more than decade-long recession.
"Puerto Rico's problems have been decades in the making", said Michael Williams, the attorney who represented Puerto Rico in its financial crisis litigation until recently.
Always Dreaming Wins Kentucky Derby
Always Dreaming roared to a 2 3/4-length victory to take the traditional garland or roses before an announced crowd of 158,070. He led in the middle of the first straightaway and was in the place position until Lookin At Lee passed him late in the race.