For Immediate Release
House Sub-Committee Holds Puerto Rico Bankruptcy Hearing
Heavily Indebted US Territory Seeks Chapter 9 Protection
WASHINGTON - A US House of Representatives Judiciary sub-committee is discussing legislation to give Puerto Rico's public utilities access to US bankruptcy protection. The Subcommittee on Regulatory Reform, Commercial and Antitrust law is meeting to debate HR 870, a bill introduced by Puerto Rico's Representative in Congress. Puerto Rico has more than $70 billion in public debt, about $20,000 per resident. The island's government attempted to restructure its public utility company's debts but was stopped by a court ruling. As a territory, Puerto Rico cannot access International Monetary Fund (IMF) loans and isn't eligible for the bankruptcy laws that govern US cities and states.
"Puerto Rico is in a debt trap and this bill could be a way out," noted Eric LeCompte, executive director of the religious anti-poverty group, Jubilee USA Network. "In this case, bankruptcy laws can help, just as a global bankruptcy process could help all countries around the globe."
Some financial firms that hold Puerto Rican bonds oppose the bill. Those funds won a recent court decision to block the island's public utility company's $9 billion debt restructuring. Meanwhile, some hedge funds involved in Puerto Rico have been involved in allegedly predatory behavior elsewhere, including Aurelius Management, one of the lead plaintiffs in the Argentine debt dispute.
"It is troubling that there are predatory hedge funds involved in Puerto Rico," said LeCompte, a United Nations expert on debt and finance. "It's important to note that various predatory funds are on both sides of this battle. It shows that these funds will bend laws in either direction for their own interests."
Puerto Rico's poverty rate is twice that of the most impoverished US state and its unemployment rate is double the US average. A 2012 study found that 80% of Puerto Rican children live in high-poverty areas, compared with 11% of kids in the 50 US states. Puerto Ricans are leaving the island in large numbers due to economic conditions. Between 2010 and 2012, 1.5% of the population left. Puerto Rico's debt burden is causing cuts to public services. Last Fall, the island cancelled its emergency helicopter service due to lack of funds.
"Puerto Rico's economy and people are suffering and debt is a big reason why," noted LeCompte. "The faith community hopes this bill starts a conversation about Puerto Rico's economic troubles."
Jubilee USA Network is an alliance of more than 80 religious denominations and faith communities, human rights, environmental, labor, and community groups working for the definitive cancellation of crushing debts to fight poverty and injustice in Asia, Africa, and Latin America.