Puerto Rico: of capital structures, control rights and liquidity

The ongoing financial distress of Puerto Rico seems to be accelerating, with no clear resolution in sight. This essay takes stock of the current situation, and suggests a path forward. The economic stress the territory has experienced in recent years is recounted, and the complex capital structure that has resulted is outlined. The essay also argues that the problems that the island faces are as much about control as they are about trimming the current debt stock. The impending lack of liquidity has put Puerto Rico on the brink. The article discusses whether action by Congress is needed to both provide fresh funds while at the same time instituting a mechanism to address the structural issues that beset the territory.