Government

Facing A String Of Lawsuits From Bondholders, Puerto Rico Declares A Form Of Bankruptcy

ST. THOMAS -- With multiple creditors on its heels with lawsuits, and its coffers depleted, Puerto Rico on Wednesday declared a form of bankruptcy permitted by the Promesa law, giving the island sweeping powers to forego a lot of its debt obligations, and perhaps eventually get a fresh start. It was the first time in history that a U.S. state or territory had taken such an extraordinary action. And it sends Puerto Rico, whose total debt and pension obligations is $124 billion -- far exceeding Detroit's $18 billion bankruptcy filing in 2013 -- into unknown waters. While the action could eventually see Puerto Rico becoming solvent in the future, before that could occur, however, the island, with its over 3 million residents, will have to withstand grim consequences: government employees will have to forego pension dollars; infrastructure projects stalled; and the brain drain that the island has been experiencing could amplify. The commonwealth's court filing on Wednesday reveal...