Puerto Rico declares bankruptcy to restructure its multibillion dollar debt

The governor of Puerto Rico, Ricardo Rosselló announced Wednesday that the island declares bankruptcy in order to restructure its multibillion dollar debt of more than US $ 70,000 million.

Rosello made the announcement at the end of the moratorium that prevented creditors go to court to demand payment of the debt to the commonwealth of the United States.

A bankruptcy process in Puerto Rico would be the largest in the history of the local debt market in the United States.

The island is experiencing a severe economic crisis, with a poverty rate of 45%, unemployment doubling the average US population and decreasing by emigration to the continental United States (Puerto Ricans are US citizens).

The risk rating agency Moody ' s sees the decision of the government as positive for creditors because the process in court would be "orderly", something preferable to "a chaotic and uncertain period."
Title III

The governor said at a news conference his decision to enroll in Title III of the Law for Supervision, Administration and Economic Stability of Puerto Rico (Promise) to address the financial crisis on the island.

Shortly after the announcement, island officials notified the decision to the Board of Fiscal Supervision (JSF), established by the US Congress.

According to Rossello, after "extensive discussions in good faith and openness of the financial books of the government of Puerto Rico to creditors,

Title III provides for a restructuring process similar to the rules for US bankruptcy protection, which can not accommodate Puerto Rico for being a Commonwealth debt.

The rule serves to paralyze lawsuits and upon submission of claims by creditors and objections by the government, put in the hands of court decisions on payment.

Promise Act was passed last year by the US Congress after Puerto Rico was declared unable to pay its huge debt to threats from creditors with endless lawsuits.

Governor of the island had requested the collaboration of the United States because of the risk of having to close the activities of the administration due to lack of liquidity.
Negotiation

The governor insisted, however, that this does not mean that negotiations with creditors to stop. Instead, he expressed his desire to serve "to accelerate the negotiation process".

Copyright imagenEPAImage captionAlgunos the blame on the island of the crisis to the particular relationship of Puerto Rico with the United States.

"The best example that can be discussed is the restructuring agreement with creditors recently established the Electric Power Authority , " said the governor.

"However, given the deficit we inherited, it is my responsibility to ensure the best interests of the Puerto Rican people , " he added.

"We are here to address the problems of Puerto Rico, not to look at the past and I am convinced that our island can resume the path of economic development with successful government steps and commitment of each of its residents."

SOURCE:  http://www.bbc.