Puerto Rico's power authority, Prepa, is in the worst shape, currently drowning in about $9 billion in debt. It is already restructuring negotiations with bondholders.
The island's overall debt currently hovers around $70 billion and has been immersed in recession for years.
The House Judiciary Committee, chaired by Rep. Bob Goodlatte, has plans to hear the bill in the coming weeks offering hope to Puerto Rico's businesses.
Pierluisi introduced the bill last July after lawmakers in Puerto Rico enacted legislation allowing public agencies similar debt-restructuring power. The nation's governor Alejandro Padilla passed the Recovery Act last June. However, on Feb. 6 a federal judge overturned that plan, which would have allowed company's like Puerto Rico's Prepa to negotiate with bondholders to reduce large debt loads.
According to Financial Times, S&P also lowered Puerto Rico's GO debt rating from BB to B on Feb. 12. The rating agency said the island's "potential inability to pay its debts, after persistent economic weakness has chipped away at revenues over many years."
Unlike other U.S. municipalities, the constitution prevents the government and public companies from seeking protection from creditors in bankruptcy courts.
Pierluisi now says Puerto Rico should focus on putting in effort to ensure it has access to Chapter 9, rather than working to enact a local bankruptcy law.
Despite receiving news that the committee will give the bill a hearing, analysts say with a Republican-led Congress, no one should be to optimistic.
Puerto Rico's debt crisis leaves many unemployed. (Photo : Getty Images)
By Jaclyn DiazPuerto Rico Banktruptcy News: Bankrupt US Commonwealth Seeking Help With Debts With New Bill
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