Puerto Rico gets green light to end five-year bankruptcy
The judge overseeing Puerto Rico’s nearly five-year-long debt restructuring process has approved a debt adjustment plan that is intended to revitalize the commonwealth’s economy and reduce its $135 billion in liabilities.
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U.S. District Judge Laura Taylor Swain approved the plan in an order filed on Tuesday, bringing nearly half a decade of litigation over Puerto Rico’s financial standing to a close and marking a historic moment for the largest-ever U.S. municipal debt restructuring.
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Puerto Rico filed for protection under a bankruptcy-like law, known as Title III, in May 2017. Its $135 billion in liabilities included more than $55 billion in underfunded pension obligations. The debt adjustment plan, proposed by a federally appointed financial oversight board, incorporates settlements among an array of creditors and aims to encourage new investments to aid the island’s economy.
The plan reduces $33 billion in bond debt to $7 billion and cuts overall debt by 80%, according to the board. It also includes protections that limit how much debt Puerto Rico can take on in the future.
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