Allowing Puerto Rico to restructure its public corporation’s debts in bankruptcy would help give the island’s economy some breathing room and politicians some authority to undertake further economic reforms, according to a commentary in the recent edition of The Weekly Standard magazine. The only problem is that as a U.S. territory, Puerto Rico cannot use chapter 9.
Puerto Rico in Distress
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Seven years after their ranks were decimated by the housing crisis, bond insurers are back in the spotlight as Puerto Rico struggles to stave off default, the Wall Street Journal reported today. Companies including Assured Guaranty Ltd., MBIA Inc.
Citibank has sold a $146 million loan it had with the Puerto Rico Electric Power Authority (PREPA) to a distressed debt investment firm, two sources said yesterday, in a sign of the growing uncertainty over the utility's finances, Reuters reported yesterday.
Puerto Rico is trying to revive a law allowing its public agencies and utilities to restructure their mounting debt as Detroit and other U.S. cities have done, Bloomberg News reported yesterday. Creditors won the first fight in the case by persuading a federal judge in San Juan to throw out bankruptcy protections similar to those allotted municipal entities in the 50 U.S. states.
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The Financial Oversight and Management Board for Puerto Rico was created under the Puerto Rico Oversight, Management and Economic Stability Act of 2016. The Board consists of seven members appointed by the President of the United States and one ex officio member designated by the Governor of Puerto Rico. Access information on the Board, documents, videos of meetings, calendar of events and live webcasts by clicking here.