Puerto Rico filed for bankruptcy today on about $73 Billion of debt. This is more than seven times the size of the previous record municipal bankruptcy, Detroit.
Puerto Rico doesn't have access to Chapter 9, like most municipalities.

The process called Title III, created by a U.S. law enacted last year to help Puerto Rico emerge from its debt crisis, allows the government to use the courts to cut debt amassed by more than a dozen agencies, sometimes with conflicting claims on the island’s cash.
The financial collapse promises to impose deep losses on bondholders who for years snapped up Puerto Rico’s securities, even as the government contended with a shrinking economy and chronic budget shortfalls. U.S. states can’t file for bankruptcy, and investors bought the bonds assured that it wasn’t a legal option for Puerto Rico either.

Governor Ricardo Rossello offered to pay bondholders (many of them hedge funds) 77 cents on the dollar, despite those bonds trading at 62 cents on the dollar.
The creditors refused.

The level of debt is such that the economy just cannot repay it. And that's leads us to the important economic point in play here. We are not arguing about whether there are going to be losses here. The losses have already happened. Money has been lent and it isn't--all--going to get paid back. That is, the losses have already happened. The only things to argue about now are who loses and how much, not whether there are going to be those losses which have already happened.

The Article III process, created by Congress just last year, known as "la junta" by Puerto Ricans, is expected to take 18 months or longer to play out.
The Puerto Rican Oversight, Management, and Stability Act board is not accountable to the Puerto Rican government, and has final say over "budget, laws, financial plans, and regulations."
However, that won't be the end of Puerto Rico's troubles.

Now you might think that a couple of years from now Congress will bow to the reality of Puerto Rico’s dependence on the US. Think again. How many senators or House members will want to vote for a bailout that would be sure to be the subject of attack ads during their re-election campaigns?
In some respects Puerto Rico is in worse shape than Argentina was after its default in 2001. That came at the end of many years of debt financing and capital inflows, a significant amount of which actually went to build power systems, roads, telecommunications and other real assets. In contrast, Puerto Rico enters insolvency with a creaky, expensive power grid, a water system in need of big improvements, a rundown tourism industry and a declining manufacturing base that had been built to take advantage of now-defunct federal tax breaks.

Essentially, Puerto Rico is America's Greece. Creditors will pick over the carcass of the island until there is nothing left, and everyone who can leave will be long gone.