When Puerto Rico’s governor Alejandro Garciá Padilla announced in late June that the island’s debt had soared to $72 billion and that, under current circumstances, it would be unable to make payments, the obvious question was: What’s next?
García outlined his plan in a televised address, but, he reminded observers, there were numerous interventions beyond his authority and control. Among those were the possibility of declaring bankruptcy.
As García explained, the option of filing for Chapter 9 protection simply wasn’t available to the United States under existing laws and policies, though he hoped federal lawmakers would reconsider, given the extenuating circumstances.
Filing for Chapter 9?
The call to offer Chapter 9 protection to Puerto Rico had been made prior to the governor’s address, however. In fact, it had been made months before García even admitted the extent of the debt crisis.
Back in February, Pedro Pierluisi, the island’s resident commissioner and sole representative in Congress–a non-voting representative, it should be noted–had introduced H.R. 870, or, as he called it, the Puerto Rico Chapter 9 Uniformity Act of 2015.
The purpose of the act was to “amend title 11 of the United States Code to treat Puerto Rico as a State for purposes of chapter 9 of such title relating to the adjustment of debts of municipalities.”
This bill, which was referred to a subcommittee a month after its introduction, went largely unnoticed by American media until this week, as a growing number of politicians, including New York City Mayor Bill De Blasio and Illinois Representative Luís Guiterrez, vocalized their support of Chapter 9 protection for Puerto Rico.
The increased media attention has spurred citizens to action, too; there’s currently at least one petition circulating that calls upon politicians to fast-track the passage and implementation of Chapter 9.
Pierluisi himself was interviewed by C-SPAN, where he discussed the particulars of his bill and expressed his belief that the debt is payable.
“What I’m asking for is that Puerto Rico be given exactly the same treatment as the states get in terms of bankruptcy.” He explained that it is not the government of Puerto Rico itself that would get this protection, as such protection is not available to individual states. Chapter 9 would, however, be extended to publicly held utilities, including the water and electricity authorities.
Despite the increased support for Chapter 9, including U.S. Treasury Secretary Jacob Lew’s call that Puerto Rico be granted “access to an orderly bankruptcy regime as soon as possible,” at the moment, Congress does not seem inclined to pass the bill.