Puerto Rico will move forward with restructuring its debt through the courts following a failure to strike a deal with creditors. The bankruptcy-like process is the biggest public debt restructuring process any U.S. entity has gone through.

Democratic Gov. Ricardo Rossello alerted the territory's seven-member Fiscal Control Board on Wednesday that the government requested Title III bankruptcy protection under the PROMESA bill. Puerto Rico had had until Monday to negotiate with bond holders to whom it owes $70 billion.

The island will have to pay only a small percentage of its debts through the Title III process.

On Saturday, Rossello told the Washington Examiner the U.S. territory would not immediately fall into a state of collapse if the government failed to reach a debt-repayment agreement with bond collectors by Monday.

"There is what I think is a false narrative that Monday, the world ends," Rossello said during an interview at the governor's mansion.

The almost five-month-old Rossello administration has proposed a new fiscal plan to address the island's $70 billion of debt — a large amount compared to its $10 billion annual budget. The governor's plan includes structural reforms to the island's finances and would work to create a sustainable path to long-term debt recovery, a challenge governors have been unable to solve for the past 17 years.

Rossello threw away the original debt-restructuring plan that had been recommended by the board, which was created to oversee the process. Instead, the 38-year-old second-generation governor submitted a new plan that would wind down Puerto Rico's Government Development Bank's operations over the next decade.

On the first day as a gubernatorial candidate, Rossello announced his intention to streamline the territory's 131 agencies to 35. Since taking office, he has followed through on his promise to shrink the government of nonessential employees and departments.

The island's board, created through the Puerto Rico Oversight, Management and Economic Stability Act law last year, approved the plan Friday and put the administration on course for bankruptcy negotiations.

As a territory, Puerto Rico is prohibited from declaring bankruptcy.