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Posted On: 04/08/2018 4:56:09 PM
Post# of 27277
Here's ONE REASON Why Folks Hate Congress!
Puerto Rico cannot declare bankruptcy without Congress’ permission — and Congress has not been forthcoming.
Normally, when a U.S. government, corporation or individual can no longer afford to pay back its lenders in full, it has the right to declare bankruptcy. In bankruptcy proceedings, a judge or arbitrator forges a compromise between the parties that typically forces creditors to take a loss, enabling the borrower to recover. The city of Detroit, for example, sought bankruptcy protection in July 2013, allowing it to cut 74 percent of its unsecured debt.
As a commonwealth of the United States, Puerto Rico cannot declare bankruptcy or otherwise restructure its debt without congressional approval. .
Puerto Rico has tried to restructure its debt to public corporations — a lower-priority category of debt than the constitutionally protected class of “general obligations” — using a local bankruptcy law. But a federal court, siding with creditors who challenged the provision, ruled that federal laws barred the island from restructuring that debt.
Puerto Rico cannot declare bankruptcy without Congress’ permission — and Congress has not been forthcoming.
Normally, when a U.S. government, corporation or individual can no longer afford to pay back its lenders in full, it has the right to declare bankruptcy. In bankruptcy proceedings, a judge or arbitrator forges a compromise between the parties that typically forces creditors to take a loss, enabling the borrower to recover. The city of Detroit, for example, sought bankruptcy protection in July 2013, allowing it to cut 74 percent of its unsecured debt.
As a commonwealth of the United States, Puerto Rico cannot declare bankruptcy or otherwise restructure its debt without congressional approval. .
Puerto Rico has tried to restructure its debt to public corporations — a lower-priority category of debt than the constitutionally protected class of “general obligations” — using a local bankruptcy law. But a federal court, siding with creditors who challenged the provision, ruled that federal laws barred the island from restructuring that debt.
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