Puerto Rico on Friday asked the U.S. Supreme Court to overturn a ruling that blocks the restructuring of the commonwealth's public agencies, as the island grapples with trying to restructure its huge debt load, Reuters reported on Friday. In a petition seeking the Court's review, Puerto Rico said that a lower court erred in concluding that U.S. bankruptcy law blocks the restructuring of the agencies' debts. Puerto Rico also said that the lower court decision leaves its public utilities in a legal "no man's land" because neither federal law nor the island's own law permits the needed restructuring. "That decision leaves Puerto Rico's public utilities, and the 3.5 million American citizens who depend on them, at the mercy of their creditors," the commonwealth said. "This court's review is warranted — and soon." Read more.
In related news, Puerto Rico today sought to assure potential buyers of bonds being sold by the local water authority that the utility does not require restructuring at this time, Reuters reported. Víctor Suárez Meléndez, the top aide to Governor Alejandro García Padilla, said that the fact that the water authority, known as PRASA, is seeking to sell around $750 million in bonds at the same time that Puerto Rico is appealing a court ruling that struck down a local restructuring law does not mean that PRASA will seek to restructure its debt if the U.S. territory succeeds in the appeal. "Assuming PRASA's financial projections are met and the utility is able to access the market on reasonable terms and for sufficient amounts to cover its capital needs, we currently do not contemplate PRASA necessitating a restructuring of its debt or seeking protection under the Recovery Act or any similar law," Melendez said. Read more.
