Sir, In “Puerto Rico debt calculus grows more complex” (May 29) you state that the effort by the US territory to authorise its government-owned electric power company, Prepa, to adjust its debts under Chapter 9 of the US Bankruptcy Code has been “stymied by the courts”.
To clarify, Congress has empowered the 50 state governments to permit their “municipalities” — a term that includes government-owned corporations — to utilise Chapter 9, but has not empowered the Puerto Rico government to do the same. Faced with this exclusion, the Puerto Rico government enacted a local law to provide for a bankruptcy-like process for its municipalities, and that law was invalidated by a federal judge on the ground that it is pre-empted by Chapter 9.
As Puerto Rico’s representative in Congress, I filed a straightforward bill to give Puerto Rico state-like treatment under Chapter 9. The pending legislation is supported by a broad and diverse coalition of individuals and organisations from across the political spectrum. The bill is opposed by a handful of Prepa bondholders for specious and self-interested reasons, but there is no question that it would be upheld by the courts if enacted.
Read more here.