Detroit may be getting a lot of positive press these days, but it's still remembered for its historic bankruptcy.
Now, retired U.S. Bankruptcy Judge Steven Rhodes, who oversaw the Detroit Bankruptcy, has been hired by Puerto Rico to help with its debt crisis.
“It’s exactly like Detroit,” Rhodes tells Chad Livengood of The Detroit News.
The paper reports that Puerto Rico Gov. Alejandro Garcia Padilla is warning that the U.S. commonwealth cannot repay nearly $72 billion in debt it owes, including unfunded pension liabilities in excess of $30 billion.
Rhodes tells the News that Puerto Rico needs the relief of bankruptcy, but federal law doesn’t allow commonwealths or states to seek Chapter 9 protection from creditors.
“I don’t see a practical way for the commonwealth to negotiate with all of the bond creditors it has all over the country and all of the different kinds of bond creditors it has,” Rhodes says in a telephone interview.