The Supreme Court on Friday agreed to hear two related cases that could help Puerto Rico restructure some of its debt under the Recovery Act, a local law that a coalition of creditors has said is preempted by federal bankruptcy law.
An appeals court in July agreed with the creditors and ruled that Chapter 9 of the Bankruptcy Code displaced the beleaguered commonwealth’s own version.
But pointing to “the most acute fiscal crisis in its history,” lawyers for Puerto Rico said the island “lacks access to any legal mechanism to restructure the debts of its public utilities” — a $20 billion burden they said leaves the commonwealth in a “no man’s land” beyond the reach of both federal and local bankruptcy protections.
“Anyone who h…
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