« Matt Levine, Insider Trading and Mr. Potato Chip | Main | Puerto Rico (A Quick Take, Part II) »

Puerto Rico (A Quick Take)

posted by Stephen Lubben

So the debt restructuring plan is out. The New York Times indicates that the Oversight Board aimed to put the Commonwealth's debt at "less than" the average of the ten most indebted states. Not exactly a "fresh start" there, is it? Why not peg the debt to that of the average state?

Nonetheless, we can expect the bondholders to complain about even the relatively modest haircut they are slated to take, and they will surely note that the pensioners are taking less of a cut. Of course, the pensioners are in some sense funding the bondholder's recovery, since they are a key factor in keeping the Commonwealth's economy alive.

Normally we say that the liquidation baseline does not work in chapter 9 cases, because there is no real way to "liquidate" a municipality. But if the bondholders push too hard, they may test that assumption with regard to Puerto Rico. Lightly populated Caribbean islands do not support large debt loads, or even 63% recoveries to bondholders.

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Contributors

Current Guests

Follow Us On Twitter

Like Us on Facebook

  • Like Us on Facebook

    By "Liking" us on Facebook, you will receive excerpts of our posts in your Facebook news feed. (If you change your mind, you can undo it later.) Note that this is different than "Liking" our Facebook page, although a "Like" in either place will get you Credit Slips post on your Facebook news feed.

News Feed

Categories

Bankr-L

  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.

OTHER STUFF

Powered by TypePad