Puerto Rico Files For Bankruptcy Protection In Largest Ever US Municipal Debt Restructuring

Tyler Durden's picture

Update: PUERTO RICO FEDERAL BOARD FILES BANKRUPTCY CASE IN U.S. COURT

* * *

As per our report last night that following the expiration of the litigation freeze, Puerto Rico's creditors had filed a barrage of lawsuits against the insolvent Commonwealth a bankruptcy was imminent,  moments ago Puerto Rico's governor announced the commonwealth will request bankruptcy protection of a portion of the island's $70 billion in debt, setting up a showdown with Wall Street firms owed billions of dollars, in what will be the largest-ever U.S. municipal debt restructuring and further complicating the U.S. territory’s efforts to pull itself out of a financial crisis.

The Puerto Rico restructuring would be far larger than Detroit’s record-setting bankruptcy, with little to no details how long a court proceeding would last or what cuts would are imposed on bondholders. The island’s financial recovery plan covers less than a quarter of the debt payments due over the next decade.

Cited by AP, Gov. Ricardo Rossello said Wednesday that a federal control board overseeing the island's finances has agreed with his request to put the debts before a court. He told reporters that he has requested that the U.S. territory's federal financial oversight board commence a Title III proceeding under last year's Puerto Rico rescue law known as PROMESA. Title III is an in-court debt restructuring process similar to U.S. Bankruptcy.

"We have reached this decision because it protects the best interests of the people of Puerto Rico," Rossello said.

“The board has agreed to submit Title III protection immediately and they will submit it.”

According to the WSJ, "the governor said he would petition Puerto Rico’s federal oversight board to invoke a quasi-bankruptcy law that puts its standoff with creditors before a judge. His decision marks the start to what could be a lengthy legal fight as Wall Street watches closely to see how other indebted municipal governments may fare in confrontations with investors."

As a reminder, Puerto Rico and its agencies owe $73 billion to creditors, dwarfing the roughly $18 billion owed by the city of Detroit when it entered what was previously the largest municipal bankruptcy in 2013.

Finally, Bloomberg notes that the financial collapse promises to impose deep losses on bondholders who for years snapped up Puerto Rico’s securities, even as the government contended with a shrinking economy and chronic budget shortfalls. U.S. states can’t file for bankruptcy, and investors bought the bonds assured that it wasn’t a legal option for Puerto Rico either.

BBG further adds that Rossello’s latest offers to creditors last week shows the commonwealth believes general obligations should receive a better recovery than its sales-tax bonds. The latest proposal offered as much as 90 cents on the dollar to general-obligation bondholders. One such bond due in 2035, was among the most actively traded at a price of 66, up from 64.7 on Tuesday.

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Haus-Targaryen's picture

Come on you bastards, mark it all to $0 and lets get this financial reset finally underway. 

PrayingMantis's picture

 

... flashback June 13, 2016 ...

... "In a 5-2 ruling on Monday, the Supreme Court ruled that Puerto Rico cannot create its own bankruptcy law because the Federal Bankruptcy Code preempts it."

>>> "Supreme Court Says No to Puerto Rico’s Bankruptcy Law"

... http://dailysignal.com/2016/06/13/supreme-court-says-no-to-puerto-ricos-bankruptcy-law/

... unless Trump and/or Congress or perhaps, even the Supreme Court reverses this Federal Bankruptcy Code, the Porto Ricans would be like salmon up against the rushing waterfall ...

;)

 

Obadiah's picture

Dont you mean US Taxpayers?  I am confused, but my sphincter got a lil twitch??

Took Red Pill's picture

Give it back to Spain. Oh wait, they're in deep debt, too!

MalteseFalcon's picture

If Federal law needs to be changed, Trump or a surrogate should propose and enact the change immediately.

Either the bondholders get full haircuts or the bondholders are made whole with pieces of Puerto Rico's equity.

A third solution i.e. money printing should be rejected.

Money printing is for new USA infrastructure that has an economic return directly to the USA.

Jubal Early's picture

This is the NWO model since 2008:  No TBTF goes bankrupt.  Period.  It doesn't matter if it is a state, a bank, or an industrial company.  The game will continue and the goyim will be plundered until the bitter end.  The less property outside of the money changers hands means more dependent serfs who are easier to control.

The territory of Puerto Rico will be bailed out, but the people there will be further enslaved.  Just as in Greece, Italy or Cypress.

MalteseFalcon's picture

My higher priority is the further enslavment of the American people.

If Puerto Ricans have to wear a horse collar, so be it.

True Blue's picture

Start with their 'public officials' and government employees who saw $120 million dollars in bonuses paid the other year.

Muppet's picture

@MFalcon, Paul Ryan disagrees with you.  The bill Ryan led passage of has  USA taxpayers back PR in case of defaults.   But, if you recall Ryan said, "default will be avoided because a blue-ribbon panel of experts will ensure PR is guided away from default... so, don't worry, the USA backstop for PR will never needed."

 

Thank you Speaker Ryan.   Good job.    

estebanDido's picture

The bondholders, the banks and the hedge vultures are the ones that could be bailed out. PR is a 100 % colony with no power what so ever even to change laws that kills its economy. Viva la mierda de democracia.

Antifaschistische's picture

CIA and GS already have the name of judges.

The multi-million dollar Spanish Villa's have been prepared...

Soon, the named judge will be offered a vacation package to Spain.

While there...GS operatives will inform him that the Villa and a lifetime income will be given to him and his family members in exchange for "doing the right thing"

estebanDido's picture

Tihis is simple, the US should get the F** out of PR, and out of Mexico and out of Venezuela, etc, etc,etc. Why are they protecting bondholders that knew PR was in bad financial shape? Why is the Us Gov always kissing Wall Street ass?

Muppet's picture

Not per Paul Ryan.

Ryan supports USA taxpayers backing PR debt.

Paul Ryan and PR are like peas & carrots... Even Forrest see's that corruption.

The thing about Paul Ryan is that he doesn't hide his corruption as well as his predecessors. He's corrupted and everyone admits it but him.

PrayingMantis's picture

 

... >>> "Dont you mean US Taxpayers?  I am confused, but my sphincter got a lil twitch??"

 

... I know it's confusing because the financial powers made Puerto Rico a perpetual debt slave without recourse to Chapter 9 protection ...

... the US taxpayers would eventually hold the bag if and when Puerto Rico is allowed bankruptcy protection ... however, Puerto Rico is not considered a US State, City or Town (I could be wrong, but according to wiki, Puerto Rico is an unincorporated territory of the United States, or construed as a non-status territory, or whatever that "unincorporated" really means ... and check Puerto Rico's qualification to file Chapter 9 according to WSJ below) and this conundrum is what prevents Puerto Rico from filing Chapter 9 ... it is neither an individual, nor a state, nor a city, nor a town, nor even a subdivision ...

 

... and according to WSJ ...

 

... >>> "U.S. Bankruptcy Code Can’t Help Puerto Rico"

... "In dealing with creditors, Puerto Rico lacks a key tool Detroit, Jefferson County, Ala., and California’s Valley Health System used to restructure their debts.

Puerto Rico, like U.S. states, can’t file for chapter 9 bankruptcy protection, which is an option for cities and towns and also any subdivision, agency or “instrumentality” of a state. But Puerto Rico doesn’t qualify as a state for the purposes of chapter 9. Thus, its heavily indebted authorities, such as the electric utility Prepa, lack the protections ..."

source: >>> https://blogs.wsj.com/moneybeat/2015/06/29/u-s-bankruptcy-code-cant-help-puerto-rico/

 

;)

Bemused Observer's picture

The Federal Bankruptcy Code preempts it? LOL!

 

Unless the Federal Bankruptcy Code is going to come up with the money to pay it, that is all so much hot air. What can't be repaid, won't be repaid.

I dont belong here's picture

There is a big difference between bankruptcy protection and just not paying back the loans.

Creepy_Azz_Crackaah's picture

Puerto Ricans are Hispanic. Therefore requiring them to pay for their spending is rayciss. All debts and obligations are null, void, and dismissed. The Constitution demands it...

peopledontwanttruth's picture

What is this constitution you speak of?

Creepy_Azz_Crackaah's picture

A dusty, old, document written by Whitey (and male Whitey at that). Therefore, it should be, and is, completely ignored. We have rulers, wise-Latinas, et al, in black robes to write laws for us now. No dusty documents needed.

earleflorida's picture

trump`ism imported [?]

no moar 'rum' for you, ussa !

scrappy's picture

Flash, Flash Back. It's Fraud.

http://www.paulstramer.net/2017/05/the-littlest-billy-goat-gruff-puerto....

Then again, who are we to complain.

Most seem to believe the constitution is about rights, when in fact it is a Charter of Bankruptcy.

https://onlashuk.wordpress.com/2017/03/06/the-equitable-revestment-of-ones-birthright-inheritance-and-estate-and-how-it-is-held-in-abeyance-by-the-imperialistic-rule-feudalism/

Was that FRAUD too? I think it might be based on that counterfeiting thingy...

https://allthingsliberty.com/2015/10/faking-it-british-counterfeiting-during-the-american-revolution/

And of course even though there is a clause prohibiting lawyers, err, esquires, err, titles of nobility in the bankruptcy charter .. er constitution, but they managed to get in and drive events and lie to us, to this very day. Folks in the 1800s knew better than most of us do now, and so added an amendment that was promptly "lost" during the civil "war"...Right.

http://www.let.rug.nl/usa/essays/general/the-missing-13th-amendment/paradise-lost-ratification-found.php

http://www.let.rug.nl/usa/essays/general/the-missing-13th-amendment/more-editions-found.php

Mandella/Mandela Effect and the 13th Titles of Nobility Amendment - This is astonishing

https://www.youtube.com/watch?v=ZHqS8xIP8Tc

American Civil War, Or, Stop Being Stupid Part 9

http://annavonreitz.com/beingstupidpart9.pdf

This lists many of the crimes of that "war" as most call it.

http://fromthetrenchesworldreport.com/terrible-truth-abraham-lincoln-con...

This covers money and our beginnings, read the whole site, the clues are there...

http://www.thetwofacesofmoney.com/index.php/Site/WhatIsMoney

Now I got to get back to drinking and praying to the gods of ignorance to let my people go.

 

 

TruthHunter's picture

If you're going to talk fraud, start with the bond raters. These bonds were junk years ago.

Offthebeach's picture

  • HAS THE WHOLE WORLD GONE CRAZY? AM I THE ONLY ONE HERE WHO GIVES A SHIT ABOUT THE RULES? MARK IT ZERO!

    Walter Sobchak

peopledontwanttruth's picture

Yup everything should start with the theme song from Warner Bros Cartoons

GreatUncle's picture

They will got to war first, standard elite policy if money was to go to nothing and their power with it.

Puerto Rico is another Greece, soon it will be held as a bad institution too in all perpetuity so that money can be farmed to wall street and so the FED doesn't have to hand it directly to the banksters ... you watch.

The different mechanisms to support TBTF are becoming more noticeable.

Well you can't have wall street going bust or any other TBTF can you?

AGuy's picture

Next comes more Cities & even some states like Illinios & New Jersey.

Creepy_Azz_Crackaah's picture

That's why they're spending with abandon. They know that, in the end, working people outside of their states will pay for their vote buying schemes and FREE $HIT FOR EVERYBODY!

AGuy's picture

"That's why they're spending with abandon"

Most states and Cities aren't spending. Infrastructure is deteriorating just about everywhere. The issue is that decades ago the politicians promised public workers monumental pension plans that they either never bother to fund or invested in Junk (subprime mortgages) and there is no money to pay out. The thing is, that these penson plans only handed out money to gov't workers. The FSA is mostly funded by Federal spending. Although states and cities did spend billions in bike paths, Wifi, Sport Stadium and other crap during the housing bubble since they though investing in Subprime debt was going to really pay off.

Creepy_Azz_Crackaah's picture

They're spending alright. Spending on gubmint employee salaries and pensions. Yes, they are not spending on the things that they should be spending on - infrastructure, etc - but they are spending.

peopledontwanttruth's picture

Thank goodness the USA has a president who knows a "little" about bankruptcy. LOL

AGuy's picture

"Thank goodness the USA has a president who knows a "little" about bankruptcy. LOL"

..And Casinos! Gambling (with Nuclear War) never harmed anyone :)

rickv404's picture

No. Fiscal irresponsibility on the part of government. We're all going to need a bailout eventually, but there'll be nothing left to depend on for that.

scrappy's picture

No, fiscal irresponsibility on the part of us, actually not doing our due dilligence in the first place.

https://onlashuk.wordpress.com/2017/03/06/the-equitable-revestment-of-on...

“As regards the first set of dangers, it behooves us to remember that men can never escape being governed. EITHER THEY MUST GOVERN THEMSELVES OR THEY MUST SUBMIT TO BEING GOVERNED BY OTHERS. If from lawlessness or fickleness, from folly or self-indulgence, they refuse to govern themselves, then most assuredly in the end they will have to be governed from the outside. They can prevent the need of government from without only by showing that they possess the power of government from within. A sovereign can not make excuses for his failures; a sovereign must accept the responsibility for the exercise of the power that inheres in him; and where, as is true in our Republic, the people are sovereign, then the people must show a sober under standing and a sane and steadfast purpose if they are to preserve that orderly liberty upon which as a foundation every republic must rest.”

 

Theodore Roosevelt.

 

Too bad he wasn't around a century earlier...the Bankruptcy has not gone well for us.

 

Our Fault.

 

We have consented to Fraud.

lester1's picture

Yep. PPT baby!!

 

33 Liberty Street NYC !!

Life of Illusion's picture

 

 

I smell a lot of P3 coming

Ghost of Porky's picture

We will bail you out but we get to harvest your organs. Deal?

Muppet's picture

Paul Ryan believes in PR citizens more than US taxpayers. He will get a bailout through (again).

E.F. Mutton's picture

"We will gladly pay you Tuesday for a Bailout today" - J. Wellington Wimpy Sanchez

Consuelo's picture

 

 

That's 'Dirty Sanchez' to you, bud...

jcaz's picture

...And it's gone...

I'll bid $12 for the beach at the auction- white sand, please.....

Offthebeach's picture

What's the cash value for switchblades, pointy shoes,  vintage hubcaps and sub Dominican quality Heroin?