Republicans offered legislation to address Puerto Rico’s fiscal crisis yesterday, signaling a growing bipartisan appetite to head off what lawmakers said could soon become a humanitarian crisis, the Wall Street Journal reported today. In the House, Rep. Sean Duffy (R-Wisc.) introduced a bill that would give Puerto Rico’s public corporations access to chapter 9 of the bankruptcy code if the island’s government accepts the establishment of a five-member financial-oversight board with the authority to oversee the island’s finances and budgets. The bill is the first from a Republican to endorse a debt-restructuring overhaul that so far has attracted only Democratic support. The bill adopts a piece of a larger proposal put forward by the White House in October. Read more. (Subscription required.)
In related news, Sen. Orrin Hatch (R-Utah) yesterday blocked a Democratic push to pass a Puerto Rico bankruptcy bill, The Hill reported. Sen. Charles Schumer (D-N.Y.) had sought unanimous consent to pass his legislation, which would give the U.S. territory access to bankruptcy courts allowing it to restructure its debt. But Hatch suggested that lawmakers were concerned that Schumer's legislation, which he introduced with Sen. Richard Blumenthal (D-Conn.), wasn't an efficient way to tackle the territory's crippling debt. Hatch, who chairs the Senate Finance Committee, introduced alternative legislation later yesterday with Sen. Chuck Grassley (R-Iowa) and Lisa Murkowski (R-Alaska) that would extend as much as $3 billion of aid to the island through a new federal authority, which would have the power to sell debt and oversee the government’s finances, according to Bloomberg News. The senators said that there would be no “bailout” of the island and that the U.S. wouldn’t be on the hook for debt issued by the authority. Click here to read the senators’ statement about the legislation.
Read Rep. Pedro Pierluisi's statement on congressional developments concerning Puerto Rico's debt crisis.
Read Rep. Sean Duffy’s press release on his legislation introduced yesterday.
Additionally, talks between Puerto Rico’s power authority and bond insurers that back its debt have stalled, highlighting the difficulties the U.S. commonwealth is facing as it negotiates with creditors, the Wall Street Journal reported today. Three months ago, bondholders and lenders agreed to accept losses of 15 percent as part of an agreement to swap old Puerto Rico Electric Power Authority debt for new bonds with more protections. The insurers are worried about the implications for other Puerto Rico debt and haven’t signed on. Read more. (Subscription required.)
Free BloombergLaw “Eye on Bankruptcy” webinar on Dec. 17 will feature Rep. Pedro Pierluisi and Judge Steven Rhodes discussing Puerto Rico debt crisis from ABI’s Winter Leadership Conference! To register, please click here.
Also, make sure to register for ABI’s Caribbean Insolvency Symposium on Feb. 4-6 in San Juan to join experts discussing Puerto Rico’s debt crisis!
For further analysis and developments on Puerto Rico’s debt crisis, be sure to visit ABI’s “Puerto Rico in Distress” webpage.
