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Puerto Rico Goes to Court for Record Restructuring: What's Ahead

  • Oversight board won’t seek any immediate rulings from judge
  • Puerto Rico filed historic case under special bankruptcy law
A domed building in the Santa María Magdalena de Pazzis Cemetery is seen from the Castillo San Felipe del Morro in San Juan, Puerto Rico, on Sunday, May 1, 2016. Puerto Rico will default on a $422 million bond payment for its Government Development Bank, escalating what is turning into the biggest crisis ever in the $3.7 trillion market that state and local entities use to access financing.
Photographer: Erika P. Rodriguez/Bloomberg

After largely fruitless negotiations, Puerto Rico turned to court to reduce its $122 billion debt to bondholders and retired employees by using a specially tailored federal law. Because territories, like states, can’t file under the Chapter 9 municipal bankruptcy provisions of the U.S. code, a procedure was created just for the distressed Caribbean island under emergency legislation last year.

Here’s what’s happened so far and what to expect: