The Commonwealth of Puerto Rico would have access to Chapter 9 municipal bankruptcy protection under legislation introduced in the Senate on Wednesday by Sens. Charles Schumer, D-N.Y., and Richard Blumenthal, D-Conn. Ten other senators co-sponsored the bill.
Puerto Rico's non-voting member of Congress, Pedro Pierluisi, introduced a similar measure in the House, H.R. 870, on Feb. 11. Mr. Pierluisi said in a statement that the bills are “not intended to, and will not, resolve all of Puerto Rico's economic and fiscal problems. It must be complemented by other reforms at both the federal and local level. However, if it enacts this legislation into law, Congress will be empowering a U.S. jurisdiction to help itself, at no cost to federal taxpayers.”
No hearings have been scheduled on the bills yet.
In June, Puerto Rico Gov. Alejandro Garcia Padilla said the U.S. territory cannot repay $72 billion in debt that it has incurred through issuance of general obligation bonds, sales tax-backed bonds and public corporation/agency bonds. In a statement Wednesday, Mr. Padilla said he was hopeful that having legislation introduced in both chambers “will propel this bill to passage with bipartisan support. Chapter 9 is an option that all states have at their disposal for their municipalities and public corporations, and there is no reason why Puerto Rico, its creditors and its citizens should not be afforded the same protections.”