The Commonwealth of Puerto Rico asked the U.S. Supreme Court to allow it to take advantage of bankruptcy protection while restructuring $20 billion in public utility debt.
A petition filed Aug. 21 by Gov. Alejandro Garcia Padilla and Secretary of Justice Cesar Miranda Rodriguez asked the court to overturn decisions by two lower courts that struck down the 2014 Puerto Rico Public Corporation Debt Enforcement and Recovery Act, which extended to Puerto Rican utilities and other public companies bankruptcy protection specifically excluded by U.S. Chapter 9 bankruptcy law.
“This case involves Puerto Rico’s ability to respond to the most acute fiscal crisis in its history,” the Supreme Court petition said, arguing that despite the absence of conflict among lower courts, “this is one of those rare cases that calls for this court’s immediate review.” The commonwealth’s three major public utilities cannot pay their debt or shut down, so they need to restructure debts “in a way that is fair not only to their creditors but also to the people they serve,” the petition said.
“It is time that the unfounded doubts that have been thrown on our ability to direct our own affairs in tax laws are cleared. There is no constitutional impediment to the enforcement of our law,” Mr. Miranda said in a statement.