Puerto Rico Placed in Bankruptcy Protection: Illinois Needs Similar Deal

mishtalk.com / Mike “Mish” Shedlock / May 3, 2017 3:14:25

There is no provision for state bankruptcies under Chapter 9 law.

Instead,  the governor of Puerto Rico, Ricardo Rosselló, petitioned for relief under Title III of a new federal law for insolvent territorial governments, called Promesa.

States like Illinois sure could use a similar deal.

DealBook reports Puerto Rico Declares a Form of Bankruptcy.

Puerto Rico’s leadership moved on Wednesday to place the island’s debt crisis into federal bankruptcy court, making it the largest United States government entity to seek court refuge from its creditors in American history.

The move sends Puerto Rico into uncharted territory. America’s recent spate of municipal bankruptcies has involved various state and federal laws, but Puerto Rico is not a state, so none of that hard-won precedent will apply. The outcome of its case could help determine where and how the deep financial troubles of certain states, such as Illinois, are resolved.

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