An adviser to Puerto Rico Governor Ricardo Rossello said yesterday that the distressed U.S. territory would not necessarily file for bankruptcy if it failed to reach a debt-restructuring deal with creditors before Monday's negotiating deadline, Reuters reported yesterday. "It depends on legal actions, if (creditors) go after our officials,” said Elias Sanchez, Rossello’s liaison to Puerto Rico’s federal financial oversight board. Sanchez’s comments were the latest indication that Puerto Rico's leadership does not view bankruptcy as the immediate certainty that many experts and people involved in the talks expect. Under the federal Puerto Rico rescue law, PROMESA, Puerto Rico has until Monday to negotiate with stakeholders on a plan to reduce its crushing $70 billion debt load, or else open itself to lawsuits from creditors. But there may be key political reasons for Rossello to delay bankruptcy until the end of the fiscal year on June 30 — even if forbearance efforts fail, and the island must defend a swarm of lawsuits in the short term: Bankruptcy could sabotage Rossello’s top-priority efforts to secure federal funding for the island’s near-insolvent Medicaid system.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
