Two empty chairs at the U.S. Supreme Court could be full of significance as the remaining justices consider whether Puerto Rico can ease its fiscal crisis with a law that would let the island’s public utilities restructure more than $20 billion in debt, Bloomberg reported today. The U.S. territory will make its case Tuesday to what probably will be a seven-member court, a rarity caused by the unexpected death of Justice Antonin Scalia in February and a financial conflict that may force Justice Samuel Alito to recuse himself. The case, part of a multi-fronted battle over Puerto Rico’s financial future, directly affects more than $20 billion owed by the commonwealth’s utilities, including $9 billion owed by the Puerto Rico Electric Power Authority, known as PREPA. A decision upholding Puerto Rico’s restructuring measure may give the island leverage to reach deals with creditors over other parts of its $70 billion in debt. Lawmakers in Congress have been negotiating for months over legislation to help Puerto Rico, though Republicans are reluctant to grant the kind of restructuring authority the U.S. Treasury Department and the island’s leaders want. The high court case could affect a tentative agreement between PREPA and most of its creditors. A decision upholding the Puerto Rico law might give PREPA a chance to try to pay them less than the 85 cents on the dollar promised by the accord. The cases are Puerto Rico v. Franklin California Tax-Free Trust, 15-233, and Acosta-Febo v. Franklin California Tax-Free Trust, 15-255.
