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Senators Introduce Bankruptcy Bill for Puerto Rico

Senators Introduce Bankruptcy Bill for Puerto Rico
Sens. Charles Schumer, D-N.Y., and Richard Blumenthal, D-Conn. (Alex Wong/Getty Images)

Wednesday, 15 July 2015 03:22 PM

U.S. Democratic senators introduced on Wednesday a bill to allow Puerto Rico's public entities to file for bankruptcy under federal laws as the U.S. territory starts negotiations with creditors to restructure $72 billion in debt.

Puerto Rico's public entities currently cannot make use of Chapter 9 bankruptcy laws as entities in U.S. states can and instead have to renegotiate their debts with creditors.

Senators Richard Blumenthal and Charles Schumer introduced the bill along with 10 other senators. The bill is identical to one introduced in the House earlier this year by Puerto Rico's resident commissioner Pedro Pierluisi.

"What we are proposing is that those public corporations and municipalities in Puerto Rico be given the same access to Chapter 9 as any similar entities in the United States," said Blumenthal speaking at a press conference on Wednesday.

Chapter 9 is the section of the U.S. bankruptcy code that deals with municipal bankruptcies.

Giving Puerto Rico access to Chapter 9 would make it easier for the island's entities to restructure their debts by providing a framework for an orderly process. Without it they would have to deal with suits filed by competing parties.

Blumenthal said it was a "quirk in the bankruptcy law" that led to Puerto Rico's exclusion.

"Chapter 9 would provide Puerto Rico and its 3.5 million U.S. citizens the essential legal framework that would allow us to adjust our debts in order to help generate economic growth and establish long-term fiscal stability," said Puerto Rico's governor, Alejandro Garcia Padilla, in a statement.

Padilla said in June that Puerto Rico was unable to pay its debts and put all of the island's various types of debt on the table for a possible restructuring, not just the debt of the island's public corporations.


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U.S. Democratic senators introduced on Wednesday a bill to allow Puerto Rico's public entities to file for bankruptcy under federal lawsas the U.S. territory starts negotiations with creditors to restructure $72 billion in debt. Puerto Rico's public entities currently...
bankruptcy, bill, puerto, rico
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2015-22-15
Wednesday, 15 July 2015 03:22 PM
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