Puerto Rico’s ‘Unpayable’ Debt: is this the Greece of the Western Hemisphere?

THE GUARDIAN

Democratic presidential frontrunner joins calls to allow the US territory to restructure its $72bn debt as senators prepare new legislation

In Washington, two Democratic senators hope to move forward within weeks with legislation in Congress that would allow the US territory to restructure debts in bankruptcy court, instead of risking chaos.Governor Alejandro García Padilla of Puerto Rico dropped a bombshell on debt holders a week ago by saying he wanted to restructure debt and postpone bond payments. He urged changes to US bankruptcy laws that currently exclude Puerto Rico.

Like US states, Puerto Rico cannot file for bankruptcy protection. But Puerto Rico’s public entities do not have the ability of US municipalities to enlist Chapter 9 of the US bankruptcy code to restructure their debt.

“As a first step, Congress should provide Puerto Rico the same authority that states already have to enable severely distressed government entities, including municipalities and public corporations, to restructure their debts under Chapter 9,” Clinton said in a statement given to Reuters.
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