Gov. Alejandro García-Padilla announced Wednesday the filing of a bill to establish the framework to allow Puerto Rico corporations in fiscal troubles to conduct an organized restructuring of their debt.
If approved, the law would be known as the “Puerto Rico Public Corporation Debt Enforcement and Recovery Act,” and would apply to a number of public corporations, mainly the Puerto Rico Electric Power Authority, the Aqueduct and Sewer Authority and the Highways and Transportation Authority, which have a combined debt of about $20 billion.
Ultimately, the law would seek to assist the corporations reorganize their finances and become self-sufficient, the governor said during a news conference at La Fortaleza, insisting that it is not a bankruptcy law.
“Federal law provides a legal structure that allows private companies and municipal entities of the United States to restructure to meet their financial challenges and continue to provide their services,” García-Padilla explained.
“However, Puerto Rico public corporations that provide essential public services to citizens are not eligible for these laws. Therefore, the law is created to provide a legal basis for them to meet a possible insolvency without jeopardizing the essential services they provide. It is important to note that this law does not include the Commonwealth’s debt,” said the governor.
Officials said the proposed law provides an orderly process by which a public corporation can achieve financial self-sufficiency to ensure their ability to provide essential services for the people of Puerto Rico, continuously and long-term.
“The bill provides two possible mechanisms for successful financial adjustment of debts of a corporation. Both are designed to ensure fair and equitable treatment for all parties concerned, as well as a consistent level of service to consumers,” the governor said.