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The Commonwealth's Title III Petition for Covered Territory or Covered Instrumentality (the "Petition") was filed in accordance with Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"), codified at 48 U.S.C. § 2161, et seq.

He said it was the right path for protecting Puerto Rico's residents and the interests of its creditors after a moratorium protecting the Caribbean island from creditor litigation expired on Monday. He and Gov. Ricardo Rossello stressed that despite activating a process to restructure a portion of Puerto Rico's debt in court, they are still pursuing talks with creditors. As this case moves forward, it will represent the largest bankruptcy ever experienced by the US municipal bond market, estimated to be worth $3.8 trillion.

"Getting involved in the weeds, in the details, is for the board to do", Bishop said.

Unlike a regular bankruptcy on the US mainland, a judge can not unilaterally seize any of Puerto Rico's assets without prior authorization from the federal control board.

"It's going to be uncomfortable for some", Barbarosh said.

Despite long-term Puerto Rico municipal bonds having already been downgraded by Moody's to junk status, Barclays, Morgan Stanley and RBC Capital Markets sold the 2014 bonds at a cost to Puerto Rico of 8.727 percent.

The $295 million will help fund the island's Medicaid budget for fiscal year 2018, which starts July 1, and enable Puerto Rico to contract with managed care health insurance companies that administer the Medicaid program. The New York Times reports that the filing includes $74 billion in debt and $49 billion in pension obligations.

But unlike Detroit, which declared itself broke to force creditors to write off some debt, as a commonwealth, the island has not been able to file for bankruptcy using normal U.S. financial regulations.

The new conditions call for a federal district judge to be in charge of the restructuring.

People are literally fleeing Puerto Rico to go and live in the mainland U.S., especially Florida.

In other words, the board remains "hopeful that continued negotiations (including through mediation) will lead to consensual resolutions such that Puerto Rico will once again be able to experience economic and social prosperity after this hard process is resolved".

"The result is that Puerto Rico can no longer fully pay its debt and pay for government services".

Rep. Nydia Velázquez, D-N.Y., who was born and raised in Puerto Rico, said that thanks to the law, the territory has the tools it needs to climb out of its crisis.

It filed a fourth lawsuit in federal court in Washington, D.C., against the U.S. Treasury Department and Treasury Secretary Mnuchin, demanding a lien on Puerto Rican rum taxes collected by Treasury, which it says Puerto Rico has improperly diverted away from bondholders. The island has been in an economic recession for about a decade and the unemployment rate is 11.5%, meaning more than one in 10 adults can't find work.

As businesses and people say goodbye to Puerto Rico, there's even less money to pay back creditors. As Jeff Mazzella, the group's president, sees it, the oversight board's action "will allow Puerto Rico to rob millions of American retirees and savers who invested in Puerto Rico bonds".