Puerto Rico takes restructuring law to U.S. high court
Source: Reuters
Markets | Tue Mar 22, 2016 12:03am EDT
Puerto Rico takes restructuring law to U.S. high court
WASHINGTON | BY NICK BROWN
Puerto Rico will ask the U.S. Supreme Court on Tuesday to validate a law that could let it cut billions of dollars from what it owes in debt at some public agencies, a key test in the islands efforts to weather a massive fiscal crisis.
The U.S. territory, facing what its governor has called an unpayable $70 billion debt and a 45 percent poverty rate, will argue its case against financial creditors, including Franklin Advisers and OppenheimerFunds, who want to keep contentious restructuring talks out of court.
As Puerto Rico leaders, creditors and U.S. lawmakers seek a debt solution in the U.S. Congress, the question before the Supreme Court is whether the island should be allowed to restructure debts under a court-supervised regime similar to Chapter 9 bankruptcy laws used by U.S. cities such as Detroit and Stockton, California.
"It is very significant that the Supreme Court took this case we're seeing efforts to try to determine with some more clarity the status of Puerto Rico," said bankruptcy expert Melissa Jacoby, a professor at the University of North Carolina School of Law.
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http://www.reuters.com/article/us-puertorico-debt-scotus-idUSKCN0WO0BB