U.S. Senators Richard Blumenthal (D-Conn.) and Charles E. Schumer (D-N.Y.) announced The Puerto Rico Chapter 9 Uniformity Act, legislation they have co-authored and introduced to address the growing fiscal crisis in Puerto Rico by granting Puerto Rico the authority to allow its municipalities and public utilities to readjust their debts under the supervision of a bankruptcy court.
The Puerto Rico Chapter 9 Uniformity Act will provide Puerto Rico with the same authority granted to all U.S. states that enables its municipalities and public utilities to restructure their debt. The bill is a duplicate of what Resident Commissioner Pedro Pierluisi submitted in the House in February.
“This measure is vital to prevent a humanitarian and financial catastrophe — a clearly avoidable disaster,” said Blumenthal. “Creditors, investors, ordinary citizens, all will be harmed if the Congress fails to act. This measure is not a bailout — involving not a dime of federal funds. It enables an orderly, rational restructuring of debt, instead of a financial free for all and potential free fall.”
“We can either do the right thing and give Puerto Rico the bankruptcy option it needs and deserves, or we can risk a disaster on the island and billions in bailout payments later,” said Schumer.
“Allowing Puerto Rico’s municipalities to go through the bankruptcy process, just like other American municipalities, is the right way to begin untangling the fiscal mess on the island, and I hope both parties will come together to get this done,” he said.
Specifically, The Puerto Rico Chapter 9 Uniformity Act of 2015 would: Amend the Bankruptcy Code to treat Puerto Rico as a state for purposes of Chapter 9, and give the Puerto Rican government the ability to authorize its municipalities and public corporations to enter Chapter 9 proceedings.
“I want to thank the Senators who introduced and cosponsored the companion bill to HR 870, and I am looking forward to working with these Senators to gain additional support for the bill from both Republicans and Democrats, Pierluisi said.
Because Puerto Rico is a territory, and not a state, “the 3.5 million American citizens that live in Puerto Rico cannot elect senators to protect and promote their interests.”
“Instead, we must rely on the goodwill of senators who were not elected by island residents and are not directly responsible to them. Today, a number of senators stepped up to the plate. They did so because this bill clearly is the right thing to do and the smart thing to do, both for the economy of Puerto Rico and for the broader U.S. economy,” said Pierluisi.
Joining Blumenthal and Schumer as co-sponsors are U.S. Senators Bill Nelson (D-Fla.), Kirsten Gillibrand (D-N.Y.), Elizabeth Warren (D-Mass.), Robert Menendez (D-N.J.), Cory Booker (D-N.J.), Harry Reid (D-Nev.), Chris Murphy (D-Conn.), Bernie Sanders (I-Vt.), Martin Heinrich (D-N.M.), and Mazie Hirono (D-Hawaii). A companion version of this legislation has been introduced into the House by Congressman Pedro Pierluisi of Puerto Rico.
Also on that list is Nevada Senator Harry Reid, who upon announcing his co-sponsorship of the bill said “this legislation will grant the Puerto Rican government the same treatment as all 50 states and allow it to authorize its public utilities to file for Chapter 9.”
“These measures will protect the 3.5 million Americans who live in Puerto Rico as well as countless jobs and investments. I applaud the efforts of Senators Blumenthal and Schumer and join in their commitment to bringing Puerto Rico out of this difficult economic situation,” he said.
“We cannot stand by as many people suffer, and burying our heads in the sand will not make this problem disappear. I will continue to work with my Senate colleagues to ensure the government of Puerto Rico can address their debt in an orderly fashion that will not cost the American taxpayers. I hope this legislation is able to give some peace of mind to Puerto Rican families,” Reid noted.