Devastated Puerto Rico Seeking More Time in Bankruptcy Proceedings
America’s commonwealth state Puerto Rico has just witnessed a catastrophe of epic proportions, which has left it completely devastated by Hurricane Maria. The island is now facing a humanitarian crisis, in addition to an already-existing economic crisis, which led to the territory filing for bankruptcy. The situation is so dire that Puerto Rico is now seeking deadline extensions in its bankruptcy proceedings.
The whole island is currently without electricity, and is facing a shortage of food and medical supplies. Puerto Rico has not only lost many lives, it has faced massive damage to most of its infrastructure.
The island filed for bankruptcy with a United States bankruptcy court in May, after it ran out of money to pay off its obligations.
Virtually all of Puerto Rico’s public institutions are facing a financial crisis. The territory has more than $70.0 billion in unpaid public obligations, while facing a severe cash crunch. It does not even have enough money to pay for its retiree benefits.
In addition, Puerto Rico’s public utility, the Puerto Rico Electric Power Authority, which is responsible for restoring electricity across the Maria-hit island, went bankrupt in July. The utility owes more than $8.3 billion, and that debt burden is expected to grow as the utility works on restoring power with little to no cash on hand.
Meanwhile, the island is now facing a shortage of cash. The economy has turned to cash-only, since the credit card system is down. The island’s biggest bank saw huge queues of people lining up to withdraw their money on the first morning that the bank opened after the hurricane.
Many residents have already decided to flee Puerto Rico. Since 2008, over 400,000 Puerto Ricans have left to settle elsewhere in the U.S., causing a major brain-drain from the island, leaving behind mostly the poor.
Puerto Rico is now looking for the U.S. Congress to pass an aid bill, similar to the one passed for Hurricane Harvey relief in the eastern United States. However, as President Donald Trump remains more bothered about trivial issues like NFL players “taking a knee” during the national anthem, Puerto Ricans are losing hope that help from the federal government will arrive.
“Cash Is in Short Supply in Storm-Ravaged Puerto Rico,” Bloomberg, September 25, 2017.
“Puerto Rico economic crisis grows in wake of Maria’s human toll,” Chicago Tribune, September 25, 2017.