US Congress Should Consider Extending Bankruptcy Protections to Puerto Rico

The US Congress should look at the possibility of granting Puerto Rico permission to restructure its debt under the Chapter 9 provision in the US Bankruptcy Code that deals with municipal bankruptcies, White House Press Secretary Josh Earnest said in a press briefing on Monday.

WASHINGTON (Sputnik) — On June 29, 2015, Governor Alejandro Garcia Padilla announced that Puerto Rico could not pay its $73 billion debt and would soon run out of money to operate the government.

“I don’t think we have taken a position on a specific legislation at this point,” Earnest said when asked about the possibility of bankruptcy law extension to Puerto Rico. “We certainly believe that this is something that Congress should take a look at.”

Because of Puerto Rico’s unique status as US island territory, the US Congress must approve of debt restructuring under Chapter 9 of the US Bankruptcy Code.

Earnest said extending US bankruptcy law to Puerto Rico is “something we [the White House] have talked with Congress about.”

On June 29, 2015, the White House stated that the United States was not considering bailing out Puerto Rico.