Puerto Rico Municipal Bankruptcies Proposed in U.S. House Bill
Puerto Rico Municipal Bankruptcies Proposed in U.S. House Bill
By William Selway and Derek Wallbank Jul 31, 2014 2:21 PM CT
Puerto Ricos government-owned corporations could file for bankruptcy protection under a bill proposed in the U.S. House of Representatives by the delegate from the Caribbean territory, which is struggling to pay $73 billion in debt.
Pedro Pierluisi, a Democrat who can propose legislation but cant vote on it, today introduced the measure that would let agencies restructure debt in court. They dont have that option, unlike cities including Detroit and Stockton, California, that have done so to escape financial burdens they could no longer afford.
The bill would enable the Puerto Rico government to authorize its government-owned corporations to utilize the tried-and-true Chapter 9 procedure if it becomes necessary, under the expert supervision of an impartial federal bankruptcy judge, Pierluisi said in a statement.
Puerto Ricos credit rating was cut to junk this year, fostering speculation among investors that the island and its agencies may be forced to default on its bonds. The island of 3.6 million people and its agencies, including its electric company, have borrowed to pay bills as the economy shrank and residents left for the U.S. mainland.
http://www.bloomberg.com/news/2014-07-31/puerto-rico-municipal-bankruptcies-proposed-in-u-s-house-bill.html