IOWA CITY, Iowa, (Reuters) – U.S. Democratic presidential hopeful Hillary Clinton yesterday joined calls for changes in U.S. bankruptcy laws that would enable Puerto Rico’s public entities to restructure some $72 billion in debt.
In Washington, two Democratic senators hope to move forward within weeks with legislation in Congress that would allow the U.S. territory to restructure debts in bankruptcy court, instead of risking chaos.
Governor Alejandro Garcia 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 U.S. bankruptcy laws that currently exclude Puerto Rico.
Like U.S. states, Puerto Rico cannot file for bankruptcy protection. But Puerto Rico’s public entities do not have the ability of U.S. municipalities to enlist Chapter 9 of the U.S. 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.
Puerto Rico has been in a recession for nearly a decade and has an unemployment rate of more than 12 percent while some 40 percent of the population lives below the U.S. poverty line, according to government data.Clinton, a former secretary of state, U.S. senator and first lady, is the front runner for the Democratic nomination in the November 2016 presidential election.
U.S. Senator Bernie Sanders of Vermont and former Maryland Governor Martin O’Malley, both Clinton rivals for the Democratic nomination, have also endorsed easing the bankruptcy laws also for Puerto Rico.
Residents of Puerto Rico are not entitled to electoral votes for president, but Puerto Ricans make up the second largest Hispanic origin group in the United States after Mexicans.
