Moody’s Investors Service said that there’s a high probability that Puerto Rico will default on its general-obligation, sales-tax or Government Development Bank debt during the next two years, Bloomberg News reported yesterday.
Puerto Rico in Distress
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Congressman Pedro Pierluisi yesterday reintroduced legislation that would empower the government of the U.S. territory of Puerto Rico to authorize one or more of its government-owned corporations, if they were to become insolvent, to restructure their debts under chapter 9 of the U.S. Bankruptcy Code, according to a press release.
Puerto Rico yesterday said that it would appeal a U.S. ruling that voided the island's restructuring law, saying that it left the U.S. commonwealth in legal limbo, Reuters reported yesterday. Late on Friday a U.S. federal judge ruled that Puerto Rico's so-called Recovery Act, which made some of its agencies eligible for court-supervised debt restructuring, violated the U.S.
A U.S. federal judge voided a controversial law that allows some of Puerto Rico's public corporations to default on their debt, saying in a ruling late on Friday that the U.S. commonwealth’s “Recovery Act” contravenes federal bankruptcy law, Reuters reported on Friday. The decision in the U.S. District Court has implications for around $20 billion of debt potentially affected under the act.