Puerto Rico files for biggest ever U.S. local government bankruptcy
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Source: Reuters
Puerto Rico announced a historic restructuring of its public debt on Wednesday, touching off what may be the biggest bankruptcy ever in the $3.8 trillion U.S. municipal bond market.
While it was not immediately clear just how much of Puerto Rico's $70 billion of debt would be included in the bankruptcy filing, the case is sure to dwarf Detroit's insolvency in 2013.
The move comes a day after several major creditors sued Puerto Rico over defaults its bonds.
Bankruptcy may not immediately change the day-to-day lives of Puerto Rico's people, 45 percent of whom live in poverty, but it may lead to future cuts in pensions and worker benefits, and possibly a reduction in health and education services.
Read more: http://www.reuters.com/article/us-puertorico-debt-bankruptcy-idUSKBN17Z1UC
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Judge Thomas Greasa of New York's 2nd District - the most powerful district in the country because it covers Lower Manhattan and can thus make (or rewrite) laws with international financial implications.
His rulings in the Argentina bondholders case (2012-16) basically gave Cayman Islands laundries who bought bonds from the black market the right to block payments to the over 93% of bondholders who bought in good faith and who were actually collecting on time and in full.
Greasa blocked their payments for 18 months until a new, right-wing administration took office in Argentina and paid off the vulture funds a rate of 7 times or more what legitimate bondholders got when Argentina resumed payment in 2005.
With this precedent in tow, only a new ruling could stop them from doing the same now.
