The U.S. Supreme Court ruled that Puerto Rico cannot adopt its own legislation to restructure its crushing debt burden because of a 1984 federal bankruptcy provision that bars the commonwealth from using chapter 9, The Washington Post reported yesterday. The 5-to-2 majority decision, written by Justice Clarence Thomas, is a blow to the Puerto Rican government and supports arguments by major holders of bonds issued by Puerto Rico’s government, agencies and utilities. Justice Sonia Sotomayor dissented and was joined by Justice Ruth Bader Ginsburg. “The plain text of the Bankruptcy Code begins and ends our analysis,” Thomas wrote, adding that the “unambiguous language” of the bankruptcy measure pre-empts any effort by Puerto Rico to fashion its own bankruptcy process. The decision leaves any rescue plan for Puerto Rico in the hands of Congress. The House and the Treasury Department have been debating ways to help the territory, which faces certain default on a portion of about $2 billion in payments due July 1.
ABI Media Webinar Examines Supreme Court’s Ruling in Puerto Rico v. Franklin California Tax-Free Trust
ABI will be holding a media webinar on Wednesday, June 15 at 1:30 p.m. ET featuring Professor Stephen Lubben discussing the Supreme Court’s ruling in Puerto Rico v. Franklin California Tax-Free Trust with ABI Editor-at-Large Bill Rochelle. There are limited slots available for ABI members to listen and participate on the webinar. Click here to register.
