The Supreme Court announced it will review a lower court decision blocking Puerto Rico from restructuring portions of its debt. The court on Dec. 4 agreed to decide whether Puerto Rico may allow public utilities there to restructure $20 billion in debt. Puerto Rico’s lawyers had urged the court to take immediate action in light of the overall magnitude of the commonwealth’s debts, around $72 billion, which it says it cannot pay.
Commenting on the decision, Eric LeCompte, Executive Director of the religious development group, Jubilee USA Network, said, “Puerto Rico needs a solution to the debt crisis that prevents austerity and protects the vulnerable,” said , “With Congress unwilling to act, courts in Puerto Rico could be a part of that solution.”
Puerto Rico passed the Recovery Act in July 2014 to allow some of its public companies to restructure their debt. A U.S. district court ruled the Recovery Act invalid on the grounds that US bankruptcy law pre-empts it. Puerto Rico is currently not eligible for bankruptcy protection under US Federal law.
In a letter to Congress on Dec. 1, Archbishop Thomas G. Wenski of Miami, on behalf of the U.S. bishops’ conference, urged a legislative response to the problem. He said, “The people of Puerto Rico are suffering from painful poverty and hunger, persistent joblessness, and other social problems, as a result of the financial crisis gripping the Commonwealth’s economy.
“They bear little responsibility for the situation yet suffer most of the consequences.”
Over 45 percent of the Puerto Rican population lives in poverty, according to the Census Bureau, and the unemployment rate, at 12 percent, is more than double the domestic unemployment rate.
Archbishop Wenski, who chairs the U.S. bishops’ Committee on Domestic Justice and Human Development, urged Congress to advance the Puerto Rico Chapter 9 Uniformity Act, a bill that would give the Puerto Rican government the same bankruptcy protections afforded to American cities. Because Puerto Rico is neither a sovereign nation nor a state, it has virtually no ability to restructure its debt and address the crisis.
Archbishop Wenski reminded Congress that “financial instruments should encourage development, not deprivation. We all have a shared responsibility to protect our poor and vulnerable brothers and sisters around the world.”