The plan solves.
Rasmussen 16 (Robert; Robert K. Rasmussen is an American legal scholar who is currently the J. Thomas McCarthy Trustee Chair in Law and Political Science at the USC Gould School of Law, where he served as Dean from 2007 to 2015. He is a prominent scholar of bankruptcy law, “Puerto Rico: of capital structures, control rights and liquidity,” Capital Markets Law Journal, Volume 11, Issue 2, ebscohost) //pa-amad
In the end, the broad outlines of what has to happen in Puerto Rico are fairly clear. The territory’s debt obligations need to be pared back. The stark reality is that it cannot service its existing debt stock. Structural changes need to be implemented as well. Puerto Rico (and the USA) needs to enact and enforce policies that will start the economy moving in the right direction. Without an entity that has the right to force the solution, however, it is fraught as to how things will proceed. In the current environment, only the USA has the ability to overcome the hurdles that lie in the path of a successful resolution to the current crisis. While there is the power, however, it is unclear what path will be ultimately taken. Possibilities include access to Chapter 9 of the Bankruptcy Code for some (or all) of the entities that have issued debt; a bailout of some sort, presumably in exchange for some structural reforms; or perhaps a new procedure designed specifically for the situation at hand. Moreover, the cost of whatever path is taken will not be cheap. It is almost inevitable that much control will shift to a control board of some sort. Lurking in the background is the precedential effect of any action as it relates to American states. Some states face fiscal distress that seems almost as daunting as that of Puerto Rico. 38 Puerto Rico is in unchartered territory. How matters are resolved there could well lead to the creation of a path that states will eventually follow.