Democrat Senators Introduce Bankruptcy Bill for Puerto Rico
Senators Charles Schumer (Democrat-New York) and Richard Blumenthal (Democrat-Connecticut) introduced a bill, Puerto Rico Chapter 9 Uniformity Act, in the U.S. Senate to allow Puerto Rico public entities to declare Chapter 9 bankruptcy. The bill is expected to be part of a related proposal that was introduced by Puerto Rico Resident Commissioner Pedro Pierluisi (Democrat-Puerto Rico), the commonwealth’s Democrat representative in the U.S. House. Since Puerto Rico is a commonwealth of the United States and not a U.S. state, the government cannot file for protection from creditors under U.S. bankruptcy laws.
The territory has about US$ 73 billion in debt, a mix of general obligation bonds, sales tax-backed bonds and public corporation/agency bonds. Public agencies on the island owe a large portion of the outstanding debt. In June 2015, Puerto Rico Governor Alejandro Garcia Padilla said the island cannot repay the outstanding billions of debt.
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