The plan for Puerto Rico's $129 billion collapse: cut 33% of its debt
After years of wrangling with its creditors, Puerto Rico disclosed a plan Friday for resolving the biggest governmental bankruptcy in United States history, by cutting $129 billion in debts to about $86 billion — a reduction of 33%.
The plan hatched by a seven-member federal oversight board is now before a federal judge, who will decide any disputes. There are sure to be plenty — the various parties are tangled in an unprecedented financial collapse.
Puerto Rico’s inability to pay its debts required Congress to create a new law, called Promesa, that allowed a territory to essentially seek bankruptcy protection.
If the plan survives the challenges ahead, it could be a model for how struggling states deal with their financial problems in the future. Illinois, New Jersey and others are weighed down by heavy debts, particularly their pension obligations.
But like Puerto Rico before Promesa, states cannot declare bankruptcy — it would require congressional action to extend a version of that framework to them.
At: https://www.nytimes.com/2019/09/27/business/puerto-rico-bankruptcy-promesa.html
Puerto Ricans protest deep budget cuts imposed in 2017 by a control board - a junta, as it's called in the region.
Many in Puerto Rico have been calling for a debt restructuring, as the only viable way to emerge from bankruptcy.
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