In the restructuring, creditors will take control of the company, leaving shareholders with virtually nothing.
The temporary downgrade of Greek bonds to "selective default", as a result of moves to restructure private creditors' debt, has caused few ripples.
"When seeking to restructure debt, creditors usually must only prove to a judge that a payment cannot be made," Garcia Padilla said Wednesday.
has expressed concern over the amount of control the oversight board will have over Puerto Rico's ability to restructure, giving creditors a vote in those restructuring decisions, and whether the bill will raise the minimum wage on the island.
Under the restructuring proposal creditors will get their money back but after a delay.
Governments sometimes negotiated a restructuring with creditors before formally missing a payment of interest or principal a process known, in the jargon, as "pre-emptive" restructuring.
That New York even tried to force a restructuring on creditors, albeit New York City's, illustrates that the threat of default is primarily not economic, but political.
Most of the loans were subsequently restructured, giving creditors back about 30p in the pound, but some creditors including Elliott, chose to hold out and pursue the Argentine government through courts across the world.
It said it expected to continue operations as usual while it restructures under creditor protection.
As Gillian Tett noted in the Financial Times: "The Kazakh government faced down some of the more aggressive Western banks by insisting on something rarely seen anywhere in the world — an orderly restructuring, with creditor haircuts, of a still-functioning bank".
