facebook linkedin twitter

Puerto Rico’s Bankruptcy Approved After Struggle With Massive Debt

January 20, 2022 by Tom Ramstack
Puerto Rico’s Bankruptcy Approved After Struggle With Massive Debt

WASHINGTON — Puerto Rico’s five-year struggle to free itself from crushing debt ended Tuesday when a federal judge signed off on the U.S. territory’s bankruptcy plan.

The restructuring cuts Puerto Rico’s public debt from $33 billion to just over $7.4 billion. The total debt from all obligations had reached $70 billion.

Local citizens were paying 25 cents of every taxpayer dollar on debt service. The bankruptcy plan cuts the debt service to 7 cents per dollar.

The Puerto Rican government sought bankruptcy in 2017 after being overwhelmed by years of mismanagement, corruption and expenses from natural disasters.


Its debt restructuring was the largest municipal bankruptcy in U.S. history. It also generated more political support for the Puerto Rican Financial Oversight and Management Board Congress created a year earlier to avoid future budget debacles.

“Restructuring the debt, however, is only one step towards Puerto Rico’s recovery,” the Board said in a statement. “Puerto Rico needs to achieve fiscal responsibility to ensure long-term stability and growth. Puerto Rico must never fall back into old practices of overspending, and of underfunding its commitments to retirees, government services and the public infrastructure.”


Attorneys for the oversight board told U.S. Bankruptcy Judge Laura Taylor Swain that Puerto Rico must cut its debt to attract new investment.

During the years of sometimes heated negotiations, Puerto Rican leaders expressed concern bankruptcy would force them into an austerity plan that failed to adequately serve its people.

After the judge’s approval this week, Puerto Rican Governor Pedro Pierluisi said the plan would make the island’s debt sustainable.

“The agreement, although not perfect, is very good for Puerto Rico and protects our pensioners, the university and our municipalities, which serve our people,” he said in a Twitter message.

One of the last remaining issues before the agreement focused on how the local government handled eminent domain claims. The judge wanted assurances residents still would have rights to compensation when the Puerto Rican government seized their property for various projects.


She said after the government reached its agreement with the oversight board that the restructuring would ensure Puerto Rico can “provide future public services and remain a viable public entity.” 

Tom can be reached at [email protected]

A+
a-

In The News

Health

Voting

In The News

May 24, 2022
by Kate Michael
Budget Hawks Want Carbon Taxes Despite Nominal Support from Congress

WASHINGTON — Although the House-passed Build Back Better agenda stalled in the Senate, many seek to reinvigorate discussion around its... Read More

WASHINGTON — Although the House-passed Build Back Better agenda stalled in the Senate, many seek to reinvigorate discussion around its $550 billion in climate-related provisions, including new spending as well as tax breaks for eco-friendly activities. However, with a high and rising national debt, spending opponents... Read More

May 24, 2022
by Dan McCue
Hyundai to Build $6.5B Electric Vehicle Plant Near Savannah, Georgia

SAVANNAH, Ga. –  Hyundai Motor Group is planning to invest $6.5 billion in a massive electric vehicle factory just south... Read More

SAVANNAH, Ga. –  Hyundai Motor Group is planning to invest $6.5 billion in a massive electric vehicle factory just south of the city of Savannah. The plans were jointly announced by Gov. Brian Kemp and Hyundai Chairman Char Euisun Chung. Once completed, the plant will create... Read More

Search for Supreme Court Leaker Falls to Former Army Colonel

WASHINGTON (AP) — When Gail Curley began her job as Marshal of the U.S. Supreme Court less than a year... Read More

WASHINGTON (AP) — When Gail Curley began her job as Marshal of the U.S. Supreme Court less than a year ago, she would have expected to work mostly behind the scenes: overseeing the court's police force and the operations of the marble-columned building where the justices... Read More

May 24, 2022
by Reece Nations
GAO Requests Federal Action on Oil and Gas Methane Emissions 

WASHINGTON — The Government Accountability Office is calling for parity on federal methane emission requirements for oil and gas companies.... Read More

WASHINGTON — The Government Accountability Office is calling for parity on federal methane emission requirements for oil and gas companies. The GAO issued recommendations on Friday for the Environmental Protection Agency and the Bureau of Land Management to cut down on methane emissions from oil and... Read More

May 23, 2022
by Dan McCue
House Panel to Investigate Cawthorn Tie to Crypto, Alleged Relationship With Staffer

WASHINGTON — The House Ethics Committee announced Monday that it has begun an investigation into allegations Rep. Madison Cawthorn, R-N.C.,... Read More

WASHINGTON — The House Ethics Committee announced Monday that it has begun an investigation into allegations Rep. Madison Cawthorn, R-N.C., improperly promoted a cryptocurrency and engaged in an “inappropriate relationship” with a member of his staff. The committee did not elaborate on the allegations.  In a... Read More

May 23, 2022
by Tom Ramstack
Bank of America Loses Effort to Dismiss Investor’s Lawsuit

WASHINGTON — A federal court ruled last week that Bank of America can be sued over an investment manager’s decision... Read More

WASHINGTON — A federal court ruled last week that Bank of America can be sued over an investment manager’s decision to sell a customer’s stock in what appears to be a sign of the times as the U.S. economy tilts toward recession. Federal courts report a... Read More

News From The Well
scroll top