The Supreme Court announced Friday it will take on a case reviewing a lower courts decision to block Puerto Rico from restructuring its debt.
The U.S. Circuit Court of Appeals in Boston shot down the Puerto Rico Recovery Act, a measure passed in 2014 by the island’s government to restructure its public utilities liabilities, in July.
Justices will decide whether the decision conflicts with federal bankruptcy code.
If the high court rules in favor of overturning the decision, the commonwealth would be able to restructure $20 billion of its $72 billion in debt, The New York Times reports.
Puerto Rico’s governor, Alejandro García Padilla, told lawmakers Tuesday the island has “no cash left” and pleaded with Congress to allow it to file for Chapter 9 bankruptcy.
Republicans lawmakers argue allowing the commonwealth to file for bankruptcy doesn’t solve the root of the problem or put it back on a path toward financial solvency.
“Let’s not forget that Puerto Rico issued its bonds with the knowledge that Chapter 9 bankruptcy wasn’t an option in the event of a default,”said Republican Sen. Chuck Grassley, at a Senate Judiciary Committee hearing held Tuesday. “Is it fair to retroactively change the rules at the expense of these investors, if other options exist for addressing Puerto Rico’s debt problems?”
Democrats argue the island should allow the island to have the bankruptcy rights extended to corporations and U.S. cities.
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