Why Puerto Rico bankruptcy could mirror Greek struggles

Author: John Crabb | Published: 11 May 2017

Puerto Rico’s decision to file for a unique form of bankruptcy could result in a prolonged and bitter litigation between the island’s creditors.

The Caribbean island invoked title III of the Puerto Rico Oversight, Management and Economic Stability Act (Promesa), its own version of the US Bankruptcy Code’s Chapter 9, on May 3. While it only counts 3.5 million citizens, the territory has more than $70 billion in outstanding debt and nearly $50 billion in unfunded pension obligation bonds. This makes the bankruptcy the largest in US history, dwarfing the previous holder, the US city of Detroit (with debts of $18 billion in 2013), by nearly 10 times.

Leland Goss of the International Capital Market Association thinks that Puerto Rico is in for a long...



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