Puerto Rico's legislature passed the 2014 "Recovery Act" which empowers the island's courts to restructure debt belonging to Puerto Rico's public companies. The First Circuit Court of Appeals previously ruled in 2015 that only Congress can determine how to restructure Puerto Rico's debt under US bankruptcy law.
"If the Supreme Court rules in favor of Puerto Rico, we'll have some additional tools to address some of the debt in an orderly way," said Eric LeCompte, a United Nations sovereign debt expert and Executive Director of the religious development group Jubilee USA. "While this could be positive. it still doesn't offer a comprehensive solution."
Only seven US Supreme Court justices are expected to hear the case because of Justice Antonin Scalia's death and because Justice Samuel Alito may recuse himself from hearing the case. Alito recused himself when the high court decided to take the case in December.
"I hope the Supreme Court will allow Puerto Rico's bankruptcy courts to arbitrate the debt," stated LeCompte, who testified to Congress in February on possible legislative solutions to the debt crisis. "Puerto Rico is in a downward spiral and it can't cut or tax its way out of this crisis."
Jubilee USA Network is an alliance of more than 75 US organizations and 550 faith communities working with 50 Jubilee global partners. Jubilee USA builds an economy that serves, protects and promotes the participation of the most vulnerable. Jubilee USA has won critical global financial reforms and more than $130 billion in debt relief to benefit the world's poorest people. www.jubileeusa.org