Supreme Court rules Puerto Rico can't restructure debt

[WestVirginiaRebel]

The Hill:

The Supreme Court ruled Monday that Puerto Rico can't restructure the debts of its public utilities to avoid a financial crisis, closing off one of the island's last remaining options for avoiding default without help from Congress.

 

In a 5-2 ruling, the justices said that although the government and people of Puerto Rico should not have to wait for possible congressional action to avert a financial crisis, the Constitution does not allow them to rewrite a statute that Congress enacted in 1984.

 

While states can allow municipalities to seek such debt relief, the lower court said, Congress had not given Puerto Rico that right.

 

“The plain text of the Bankruptcy Code begin and ends our analysis,” Justice Clarence Thomas wrote in the majority opinion. “Resolving whether Puerto Rico is a ‘state’ for purposes of the pre-emption provisions begins ‘with the language of the statute itself,’ and that ‘is also where the inquiry should end’ for ‘the statute’s language is plain.’ ”

 

Puerto Rico had long been included as a state under the bankruptcy code, but Congress amended that definition in 1984 to exclude the territory.

 

The island has more than $72 billion in outstanding debt, with public utilities accounting for $20 billion of the total. Seeking to alleviate that burden, Puerto Rico enacted legislation in 2014 that would have provided the island's electric and water utilities an alternative way to restructure their debts.

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A state with all of the benefits but none of the responsibility?