Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comKey Contacts
Back
Puerto Rico’s troubling debt position threatens its economic viability, and without Chapter 9 bankruptcy protection as an option, the unincorporated U.S. territory is facing a critical financial situation.
The commonwealth’s economy heavily depends on tourism, which has plummeted recently due to declines in Americans’ discretionary spending. In response, the island has been operating largely on bank credit and other short-term measures that are not only unsustainable, but have raised its borrowing costs to a record high, Bloomberg reports. As a further cause for concern, Bloomberg notes that approximately 77 percent of municipal-bond mutual funds hold Puerto Rico debt. Should the island continue to struggle, the federal government may need to step in, a scenario that is unprecedented, the New York Times reports.
The Times notes that Puerto Rico’s debt stands at $87 billion – or $23,000 for every resident. In addition, the territory is struggling to protect its local economy as large swaths of its 3.7 million residents are fleeing the island in search of better economic opportunities. However, unlike U.S. cities and counties that are permitted to seek municipal bankruptcy protection under Chapter 9 of the bankruptcy law, this option is not afforded to Puerto Rico. Under existing legislation, U.S. states and territories lack the ability to declare bankruptcy, leaving Puerto Rico with limited options.
However, Gov. Alejandro Garcia Padilla has noted that the island is not bankrupt in the legal sense of the word, and will continue making strides in overcoming its burdensome debt condition. Despite his optimism, the small commonwealth is graded one step above junk by the three major rating firms and is expected to borrow as much as $1.2 billion by the end of 2013, Bloomberg reports.
Padilla and government officials continue to travel to New York and Washington to discuss different options, one of which is allowing Congress to establish a financial control board to assist the island during its financial turmoil.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
You Just Received a Federal Grand Jury Subpoena in New Jersey: Now What?
Receiving a federal grand jury subpoena is not something most businesses or individuals anticipate. While it can be concerning, a federal grand jury subpoena does not necessarily mean that you are being accused of wrongdoing. It does, however, mean that a federal criminal investigation is underway and that federal prosecutors believe you may possess information […]
Author: George McGowan
Why Every Business Should Conduct an Annual Insurance Coverage Review
Most New Jersey business owners purchase insurance policies, file them away, and assume they are protected if a claim arises. Without a regular insurance coverage review, many companies discover gaps only after a lawsuit, cyberattack, property loss, or other significant event occurs. An annual insurance coverage review can help businesses identify potential risks, ensure their […]
Author: George McGowan
Demand Letters & Cease and Desist Letters: When to Send One (and When Not To)
Businesses and individuals often encounter situations where another party breaches a contract, fails to pay a debt, or continues harmful conduct. In many such disputes, a precisely drafted demand letter or cease-and-desist letter serves as a powerful legal tool. It can frequently resolve the dispute and avoid litigation. While demand or cease-and-desist letters can resolve […]
Author: George McGowan
How to Effectively Use Contracts to Manage Risk
Key provisions in your contracts, including those relating to indemnification, insurance, and defense, are essential to contract risk management. While sometimes considered “boilerplate,” these provisions play a pivotal role when determining which party is responsible for certain costs and liabilities. They must always be negotiated and drafted carefully. Indemnification Clauses Businesses should never overlook the […]
Author: George McGowan
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.