The largest municipal bankruptcy in U.S. history is taking place in the territory of Puerto Rico. $120b debt and pension obligations need to be restructured.
It owes $72m to creditors, many of which will have to eat the losses.
The 3 million-strong territory will close 184 schools as part of its cutting down of social services costs (students will go to other schools). Pensions are also expected to take a hit.
The Puerto Rican economy faces many challenges. They have lost 10% of their population in the last 10 years (mostly to the U.S.), and 20% of the island’s jobs. The current unemployment rate is at 12%. Because they are a territory and not a state, they do not have representation and have a hard time getting funding from the U.S. government.