Puerto Rico Governor Ricardo Rossello said on Wednesday he would move to, to begin with, a form of bankruptcy, for the island, or in particular, public facilities, under title III of last year in Puerto Rico recovery act, known as PROMESA.
Rossello said he requested that the island’s financial oversight board to initiate title III, a day after several major creditors sued his government in the standard settings on the island of 70 billion US dollars in bonds.
Insolvency proceedings for Puerto Rico would be the largest in the history of the $3.8 trillion U.S. municipal debt market. It would give Puerto Rico to impose the legal possibility of drastic discounts on creditor recoveries, but could investors also scare off and extend the island’s lack of access to bond markets.
Title III, a court, debt restructuring, similar to U.S. bankruptcy protection, because Puerto Rico is excluded and reserved from Chapter 9 of the U.S. bankruptcy code for insolvent public entities.
The legal process, this does not mean that negotiations for a consensual restructuring agreement must cease, although the Governor said.
“It is my wish that the government title III procedure speeds up the negotiation process by saying the greatest possible consensus,” the Governor said in the statement, which was in Spanish.
Rossello control plan for the island, approved by the oversight board, in March, to pay forecasts of Puerto Rico, with only $800 million per year debt, less than a quarter of what it owes. The low number of alienated from creditors and negotiations in the direction of a restructuring offer.
In addition to its debt, Puerto Rico’s rate, with a 45 percent poverty, a shrinking population and unemployment is more than double the U.S. average
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