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Puerto Rico files for bankruptcy: announces huge, historic debt restructuring Login/Join 
Step by step walk the thousand mile road
Picture of Sig2340
posted
We've seen cities and counties declare bankruptcy. There is a great deal of financial pain involved for the employees and citizens.

Now we get to watch an almost-a-state (unincorporated U.S. territory) do it.

Is it a warm up for California or Illinois?

quote:
http://www.wftv.com/: Puerto Rico files for bankruptcy: announces huge, historic debt restructuring

SAN JUAN, Puerto Rico (AP) - Puerto Rico's governor on Wednesday announced a historic restructuring of a portion of the U.S. territory's $70 billion debt through courts after negotiations with bondholders failed. The announcement marks the biggest bankruptcy-type process ever for the U.S. municipal bond market.

Gov. Ricardo Rossello said that a federal control board overseeing the island's finances agreed with his request late Tuesday to put certain debts before a court.

"We're going to protect our people," he said hours after the U.S. territory was hit with multiple lawsuits from creditors seeking to recuperate [strange word choice] the millions of dollars they invested in bonds issued by Puerto Rico's government, which has declared several defaults amid a 10-year recession.

Rossello said one of the lawsuits sought to claim all revenues generated by the island's Treasury Department for bondholders.

"I'm not going to allow that to happen," he said.

Rossello said the debts of certain agencies will be restructured in court, while others will be resolved through ongoing negotiations with bondholders. He said he did not yet have details on the breakdown of those debts. The island's Electric Power Authority has some $9 billion of debt, the Aqueducts and Sewer Authority has roughly $5 billion of debt and the Highways and Transportation Authority has around $7 billion of debt.

A federal district court judge will now be in charge of the restructuring. Bondholders cannot challenge Rossello's decision until 120 days from now.

Elias Sanchez, the governor's representative to the board, criticized creditors for filing lawsuits even as the governor continued to hold what he called good-faith negotiations after a litigation freeze expired after May 1.

"When a line is crossed, the government has to act in favor of the people of Puerto Rico."

Several groups representing bondholders did not immediately return requests for comment.

In the next couple of days, the chief justice of the U.S. Supreme Court is expected to appoint a federal district court judge to oversee Puerto Rico's case, he said. Meanwhile, the government will continue to talk to creditors and seek a stay on the nearly two dozen lawsuits that the U.S. territory faces.

Sanchez noted that unlike a regular bankruptcy in the U.S. mainland, a judge cannot unilaterally seize any of Puerto Rico's assets and turn them over to bondholders.

"The courts cannot say, 'We're going to give you the Puerto Rico coliseum, or these properties from the Land Authority," he said. "They just cannot do that without the consent of the board."

Puerto Rico is facing $70 billion in debt. By comparison, the U.S. city of Detroit had $9.3 billion of obligations when it filed for bankruptcy in 2013 in the biggest U.S. municipal bankruptcy ever.

While Detroit's case was resolved in a couple of years, it is unclear how long it will take for Puerto Rico.

"This is much bigger and much more complex than Detroit," Sanchez said, adding that he estimates the process could be completed within four years.

The announcement has sparked widespread uncertainty on the island, where Puerto Ricans are struggling with increases in taxes, higher utility rates and an unemployment rate that has hovered around 12 percent. The crisis has prompted nearly 450,000 Puerto Ricans to leave the island for the U.S. mainland in the past decade.

It is too early to say what kind of impact a debt restructuring in court will have on the 3.4 million people that remain on the island, economist Jose Joaquin Villamil told The Associated Press.

"(It) presents a very big risk for both parties," he said, referring to the government and to bondholders. "We don't know what a federal district court judge is going to decide."

However, he warned that the process will further spook the type of investors that Puerto Rico's economy needs as it prepares to implement several austerity measures. Sanchez disputed that opinion, saying that a court-supervised restructuring would actually provide more comfort to investors.

Economist Gustavo Velez told the AP that Rossello's announcement is the best path for Puerto Rico at this point. The previous governor announced that the $70 billion debt load was unpayable and needed restructuring.

"It's been three years of agony, uncertainty and negotiations that have cost the island millions in consultants that have produced no results," he said. "We cannot keep stretching this chewing gum further."



Anyone know why the courts cannot give creditors assets like the coliseum or properties from the Land Authority?





Nice is overrated

"It's every freedom-loving individual's duty to lie to the government."
Airsoftguy, June 29, 2018
 
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Unhyphenated American
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Posts: 7353 | Location: Between the Moon and New York City. | Registered: November 27, 2011Reply With QuoteReport This Post
Lawyers, Guns
and Money
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quote:
The announcement has sparked widespread uncertainty on the island, where Puerto Ricans are struggling with increases in taxes, higher utility rates and an unemployment rate that has hovered around 12 percent. The crisis has prompted nearly 450,000 Puerto Ricans to leave the island for the U.S. mainland in the past decade.

Why leave?
It's a socialist utopian paradise!
If you voted for it... I don't want you coming to the U.S. mainland. That's like Californians infecting Texas with the GDC disease.
... and there's absolutely no reason for the rest of us to pay for it.



"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible."
-- Justice Janice Rogers Brown

"The United States government is the largest criminal enterprise on earth."
-rduckwor
 
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Gracie Allen is my
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quote:
Originally posted by Sig2340:
Anyone know why the courts cannot give creditors assets like the coliseum or properties from the Land Authority?

Apparently that's a clause in the PROMESA statute the US passed some time ago to try to help Puerto Rico get its act together. The article also claims that restriction is normal when municipalities go through Chapter 9 bankruptcy, but that Puerto Rico is actually going through a "bankruptcy-like" procedure that isn't quite the same thing as bankruptcy.

http://www.usatoday.com/story/...bankruptcy/101243686
 
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Lawyers, Guns
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quote:
The article also claims that restriction is normal when municipalities go through Chapter 9 bankruptcy, but that Puerto Rico is actually going through a "bankruptcy-like" procedure that isn't quite the same thing as bankruptcy.

In a real bankruptcy assets are liquidated and divided in satisfaction of claims.

What I think most people don't realize is that loaning money to governments can be very dangerous because you don't have a claim to any assets in the event of default.
I think most municipal debt is over priced because people are stretching for yield.



"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible."
-- Justice Janice Rogers Brown

"The United States government is the largest criminal enterprise on earth."
-rduckwor
 
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Woke up today..
Great day!
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Illinois on deck!
 
Posts: 1852 | Location: Chicagoland | Registered: December 10, 2008Reply With QuoteReport This Post
His Royal Hiney
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There goes Puerto Rico bonds. whoops.



"It did not really matter what we expected from life, but rather what life expected from us. We needed to stop asking about the meaning of life, and instead to think of ourselves as those who were being questioned by life – daily and hourly. Our answer must consist not in talk and meditation, but in right action and in right conduct. Life ultimately means taking the responsibility to find the right answer to its problems and to fulfill the tasks which it constantly sets for each individual." Viktor Frankl, Man's Search for Meaning, 1946.
 
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Ammoholic
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quote:
Originally posted by Rey HRH:
There goes Puerto Rico bonds. whoops.


I knew I should have fucking diversified! Why the hell did I put my whole GD retirement in them! Mad



Jesse

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Who knew?!

Blindsided....

No, not really.
 
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No double standards
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Somehow I think the US taxpayer will be hit with the bailout.




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- Judge Learned Hand, May 1944
 
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Gracie Allen is my
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Well, first they're gonna soak the unsecured debt holders. At this point we're probably waiting to see what happens to the secured debt holders. Then, I suppose, we'll know.

Of course there's always the issue of how many debt holders pay taxes in the US, too. I don't know much about tax law, but one would think that a bond holder who gets paid something less than the full amount of the bond would get to declare the difference as a loss on their tax returns. Having less money coming into the US economy and less revenue going into the US Treasury is going to hit the taxpayer one way or another.
 
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They are typical democraps, they piss the money away and give free shit to everyone. Seems every damn person seems to have a free hospital bed down there as well as tons of free medical equipment en those who would not qualify for it in the states. I've sold containers and containers and containers of stuff down there, at a very disproportionate amount.


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Posts: 8880 | Location: 18 miles long, 6 Miles at Sea | Registered: January 22, 2012Reply With QuoteReport This Post
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I read somewhere that 'tropical climates' - because they are so easy to live in - make inhabitants lazy and lacking in work ethic. No climatic hardship to encourage industriousness.

Conversely - living in a climate with a full winter season necessitates a work ethic to prepare for and store for the coming harsh winter.

Maybe that accounts partially for PR's lack of desire to produce. Obviously the socialist utopia angle isn't working out. Nice place to visit though.

--------------------------


Proverbs 27:17 - As iron sharpens iron, so one man sharpens another.
 
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His diet consists of black
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Other than a target for naval gunnery practice (and even that we longer do), what, exactly, do we need Puerto Rico for?
 
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Ice age heat wave,
cant complain.
Picture of MikeGLI
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quote:
Originally posted by egregore:
Other than a target for naval gunnery practice (and even that we longer do), what, exactly, do we need Puerto Rico for?


I don't drink rum, so I couldn't give a shit.
It's not that nice of an island.




NRA Life Member
Steak: Rare. Coffee: Black. Bourbon: Neat.
 
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I'd rather have luck
than skill any day
Picture of mjlennon
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Governments going bankrupt is very bad trend.

Let me see if I understand. Govs don't need tax dollars to spend if the can just borrow it. Now they don't have to pay/repay for it. What could go wrong. Sounds like a politicians economic perpetual money machine. Can I have one too?
 
Posts: 1856 | Location: Fayetteville, Georgia | Registered: December 08, 2005Reply With QuoteReport This Post
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Picture of downtownv
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quote:
Originally posted by egregore:
Other than a target for naval gunnery practice (and even that we longer do), what, exactly, do we need Puerto Rico for?


Puerto Rican Girls, just Dying to meet You!


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Posts: 8880 | Location: 18 miles long, 6 Miles at Sea | Registered: January 22, 2012Reply With QuoteReport This Post
Fuimus
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Why are we involved with this shit hole?
 
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No double standards
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quote:
Originally posted by chellim1:...Why leave?
It's a socialist utopian paradise....If you voted for it...


Parasites always seek a new host after they have killed the last host. Roll Eyes




"Liberty lies in the hearts of men and women. When it dies there, no constitution, no law, no court can save it....While it lies there, it needs no constitution, no law, no court to save it"
- Judge Learned Hand, May 1944
 
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quote:
Originally posted by Floyd D. Barber:
[FLASH_VIDEO]<iframe frameborder="0" height="288" scrolling="no" src="https://secure.hulu.com/embed.html?eid=z6Y6l0R6QFe47BGItrjb2A" width="512"></iframe>[/FLASH_VIDEO]


Thanks, Floyd D., that gave a much needed laugh. From when SNL was actually funny.

Now? Al Franken. Senator from Minnesota.
Do you need any more proof that you have awakened in Bizarro World?


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