US House to Hear Bill on Puerto Rico Multi-Billion Dollar

A bill that could give Puerto Rico's financially burdened public agencies a chance to restructure their debts will get a hearing before a key congressional committee reports Reuters. Other U.S. cities such as Detroit and Stockton have made similar moves under the section of U.S. bankruptcy law.

The House Judiciary Committee plans to hear the bill in the coming weeks. The committee is chaired by Virginia Republican Rep. Bob Goodlatte.

The proposed bill will allow Puerto Rico's power, water and highway authorities to reorganize their debt under chapter nine of the U.S. Bankruptcy Code. The proposal is sponsored by Puerto Rico's non-voting representative, Pedro Pierluisi.

Of the three public agencies, Prepa, Puerto Rico's power authority, is facing the worst conditions. Prepa has accumulated $9 billion in debt and is currently in negotiations with bondholders.

Pierluisi introduced the bill in July after the island's lawmakers enacted local legislation granting the agencies similar debt-restructuring authority. However, last week, a federal court struck down the law claiming that it violated the U.S. Constitution because it allowed a state government to modify local debt.

Pierluisi said last week that the island nation should concentrate their efforts on its access to chapter nine rather than working to re-enact the local bankruptcy law. However, analysts have said that the prospects that the bill will pass in a Republican-led Congress are slim.

In total, Puerto Rico and its agencies have approximately $70 billion in debt within the U.S. municipal bond market.



Puerto Rico and U.S. flags flutter on a building that once belonged to a restaurant, in San Juan, Puerto Rico.

Puerto Rico and U.S. flags flutter on a building that once belonged to a restaurant, in San Juan, Puerto Rico. | Photo:

 
A Puerto Rico bankruptcy bill is expected to get a hearing with the House of Representatives in coming weeks according to sources.
US House to Hear Bill on Puerto Rico Multi-Billion Dollar Debt

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