Last Monday The Supreme Court ruled against Puerto Rico regarding its Debt, and determined that the island cannot turn to Act 71 – which enables some Commonwealth Public Corporation in financial distress to restructure their debt obligations – striking down Puerto Rico law.
This means that the Commonwealth of Puerto Rico will not be able to set up its own bankruptcy mechanism and restructure its 72 billion in debt, of which more than half belong to public corporations that often ask for the government assistance.
Justice ruled against the Act 71 from 2014 , known as “la ley de quiebra criolla”- (creole bankruptcy law).
Governor Reacts Against the Decision Supreme Court
The last two rules from the Justice are a blow to Puerto Rico, said Alejandro Padilla.
The Supreme Court rejected the creole bankruptcy law. Last week, the same forum, declared the Commonwealth does not have the sovereignty to judge a person when the Federal Courts have already done so.
Does anyone think this is good for Puerto Rico? Of course not. Garcia Padilla insisted he will be present at the United Nation Organizations ONU to denounce the USA and its change in position regarding their political relationship.
Despite of the setback the Justice Department had yesterday from the Supreme Court of the States, Cesar Miranda, the secretary, said he was convinced that the absence of federal regulations gave puerto Rico the tools to enact its own municipal bankruptcy scheme to restructure his debt. We are sure that FTAA (Free Trade Areas in America ) legitimately exercised its power of legislation to face the financial crisis, disagreeing with the 5-to-2 decision which disables the Debt Enforcement Act.
“We present this case at the Supreme Court because we are convinced that it is legally impossible that Puerto RIco cannot restructure its debt […]. There is no precedent in the American Justice System in which any State in the Union has been stripped of legal recourse to restructure its debt. It is inexplicable that exclusion of the protection of the 1984 Federal Bankruptcy Code was accepted as correct without any explanation. We are very surprised with this decision. Considering what we saw and heard at the Supreme Court, we believe that the balance will tip in our favor.”
He added “We defend the constitutionally the “creole bankruptcy law” because it is the essential restructuring element of Puerto Rico, facing the financial crisis we are having.”
“We respect the Supreme Court’s decision, and we state again the commitment of the Commonwealth -through all available means- to restore the fiscal health of the Puerto Rican corporations”, he said in closing.