Mitu Gulati and Bob Rasmussen members of the law faculties of Duke University and the University of Southern California, respectively argue that Puerto Rico has another route to restructuring its debts
The federal courts have declared that Puerto Rico does not have the authority to enact an insolvency regime applicable to its public sector borrowers.
That power, the courts have said, resides exclusively with the U.S. Congress. In 1984, however, the U.S. Congress explicitly excluded Puerto Rico from the provisions of the U.S. Bankruptcy Code (Chapter 9) that allow municipalities like Detroit to restructure their debts under the supervision of a U.S. bankruptcy judge.
Nor is Puerto Rico, a territory of the United States, entitled t…
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