Puerto Rico’s government-owned corporations could file for bankruptcy protection under a bill proposed in the U.S. House of Representatives by the delegate from the Caribbean territory, which is struggling to pay $73 billion in debt, Bloomberg News reported yesterday. Pedro Pierluisi (D), who can propose legislation but can’t vote on it, yesterday introduced the measure that would let agencies restructure debt in court. They don’t have that option, unlike cities including Detroit and Stockton, Calif., that have done so to escape financial burdens they could no longer afford. The bill would “enable the Puerto Rico government to authorize its government-owned corporations to utilize the tried-and-true chapter 9 procedure if it becomes necessary, under the expert supervision of an impartial federal bankruptcy judge,” Pierluisi said in a statement. Puerto Rico’s credit rating was cut to junk this year, prompting speculation among investors about bond defaults. The island of 3.6 million people and its agencies, including its electric company, have borrowed to pay bills as the economy shrank and residents left for the U.S. mainland. Its debt is tax free in all states and is held in 66 percent of U.S. municipal-bond mutual funds.
