Puerto Rico turns to courts for debt protection
SAN JUAN, Puerto Rico — Puerto Rico’s governor turned to the courts Wednesday to protect the U.S. territory from a crushing $73 billion debt in the largest effort ever made by a U.S. government to shield itself from creditors.
Gov. Ricardo Rossello made the announcement after negotiations with Puerto Rico’s bondholders failed. Rossello said a federal control board overseeing the island’s finances agreed with his request to put certain debts before a federal bankruptcy court.
The outcome of the case could have implications for financially troubled U.S. cities or states.
“We’re going to protect our people,” the governor said hours after the territory was hit with multiple lawsuits from creditors seeking to recuperate the millions of dollars they invested in bonds issued by Puerto Rico’s government, which has declared several defaults amid a 10-year recession.
Rossello said one of the lawsuits sought to claim all revenues generated by the island’s Treasury Department for bondholders.