CORRECTED-U.S. court upholds ruling against Puerto Rico bankruptcy law

(Changes court description in first paragraph to "appeals" from "supreme")

July 6 (Reuters) - A U.S. appeals court affirmed a lower court decision to strike down Puerto Rican legislation aimed at granting local municipalities the right to enter bankruptcy, but said excluding the U.S. territory's public entities from a federal bankruptcy law was unconstitutional.



"Besides being irrational and arbitrary, the exclusion of Puerto Rico's power to authorize its municipalities to request federal bankruptcy relief should be re examined in light of more recent rational-basis review case law," the U.S. Court of Appeals for the First Circuit said in a ruling late on Monday. (Reportin by Edward Krudy; Editing by Nick Macfie)

CORRECTED-U.S. court upholds ruling against Puerto Rico bankruptcy law