Puerto Rico unfortunately in the news again…

At least I have a brother who is a bankruptcy lawyer, so my family’s “beta” is better than other’s…

Critical elements of Puerto Rico’s plan to avert financial disaster are in jeopardy, after a federal judge struck down a law that allowed the government to restructure certain debts.  The law, known as the Recovery Act, was meant to give Puerto Rico’s public corporations protections similar to bankruptcy. Unlike American cities like Detroit, which used federal bankruptcy law to sort out its finances, Puerto Rico, a United States commonwealth, is not permitted to declare bankruptcy.  In his decision on Friday night, Judge Francisco A. Besosa of the United States District Court in San Juan, Puerto Rico, said the Recovery Act overstepped federal law, and he enjoined commonwealth officials from enforcing it. The government said on Monday that it planned to appeal the judge’s ruling.Without the Recovery Act, government officials worry that attempts to gain concessions from creditors and unions at public corporations like the deeply indebted Puerto Rico Electric Power Authority will dissolve into chaos.

via Judge Threatens Plan for Puerto Rico to Avert Financial Catastrophe – NYTimes.com.

About mkevane

Economist at Santa Clara University and Director of Friends of African Village Libraries.
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