Puerto Rico prepares for potential legal action
As the first Monday of the year came and went, Puerto Rico defaulted for the second time on its $70 billion debt.
This is not really surprising considering Governor Alejandro Garcia Padilla announced last week that the island would not be able to pay back two of the 13 payments that were due. However, with this second default, the door is now open for potential litigation.
In an interview with CNBC, Padilla said Puerto Rico’s Justice Department is starting to prepare for any incoming legal action.
“It will be very costly — that litigation — for the commonwealth and our creditors,” Gov. Alejandro Garcia Padilla told CNBC on Monday. “Every dollar used to pay lawyers will be a dollar … not available to pay creditors.”
In his address last week, Padilla mentioned House speaker Paul Ryan’s call to the House about coming up with a solution for the island’s debt crisis. Ryan said he hoped a solution would be ready by March, and Padilla very pointedly remarked that the payments “are due in January” not March.
It seems however, Ryan’s call is beginning to be heard. Reuters reports two House committee hearings are scheduled this month on Puerto Rico: one held by the Subcommittee on Energy and Mineral Resources and the other by the Subcommittee on Indian, Insular and Alaska Native Affairs.