Advocates Urge U.S. Supreme Court to allow Puerto Rico to Restructure Debt


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LatinoJustice PRLDEF, on behalf of more than a dozen organizations, filed an amicus brief urging the U.S. Supreme Court to allow Puerto Rico to move forward with a plan to restructure part of its debt given the dire economic and humanitarian crisis the island is currently facing.

In 2014, Puerto Rico passed the Puerto Rico Public Corporation Debt Enforcement and Recovery Act which would have allowed the island to restructure much of its municipal and agency debt. A federal district court voided the act and prevented the country’s leaders from moving forward with the legislation.

The government of Puerto Rico has appealed the decision and now the U.S. Supreme Court will decide whether Puerto Rico’s domestic version of municipal bankruptcy will be allowed to proceed, granting the island much needed financial relief.

“Puerto Rico’s ability to address its own fiscal crisis is clearly hampered by its colonial relationship to the United States,” said Juan Cartagena, LatinoJustice PRLDEF President and General Counsel. “What is also clear, however, is that immediate access to a structured debt reorganization vehicle is needed now. Puerto Rico’s attempts to do so were halted by the courts and this appeal to the Supreme Court seeks to restore one method of addressing this fiscal crisis. Amici support that effort because we recognize that the harms are immediate and go well beyond the borders of island.”

The economic crisis in Puerto Rico has now provoked a humanitarian one, and the people of Puerto Rico have had to deal with austerity measures, the closing of approximately 150 public schools, massive lay-offs of employees, significant tax increases and delayed tax rebates. As a result, hundreds of thousands of people have been forced to leave Puerto Rico to emigrate to the United States.

If the court allows Puerto Rico to restructure its debt, it would provide a desperately needed lifeline that will prevent the country from further implementing policies that disproportionately burden the people of Puerto Rico, while creditors continue to remain untouched, demanding full payment for discounted bonds they bought. Implementation of the Recovery Act will also will stem the migration from Puerto Rico, allowing more residents to remain and contribute to the island’s tax base, contributing to the growth of the local economy.

LatinoJustice PRLDEF Associate Counsel Natasha Lycia Ora Bannan said, “The massive migration of Puerto Ricans leaving the island for the United States would be deterred if Puerto Rico were allowed to respond to the economic crisis accordingly, including by implementing its own bankruptcy legislation. The loss of hundreds of thousands of Puerto Ricans has consequences both in Puerto Rico and the United States, and significantly impedes the island’s capacity to generate economic stability, both in the short and long term.”

Edward H. Tillinghast, III of the law firm Sheppard Mullin Richter & Hampton LLP, said, “We at Sheppard Mullin are honored to provide pro bono counsel to LatinoJustice PRLDEF and the people of Puerto Rico on this important issue before the Supreme Court, which directly impacts millions of Puerto Ricans who have been adversely impacted by being forced into a legal ‘no man’s land’ -- without having the opportunity to utilize its Recovery Act or any legal regime to restructure its public debt in a fair and equitable manner.”

The brief was filed on behalf of Alianza Americas, ASPIRA, Dominican Bar Association, Hispanic Federation, Hispanic National Bar Association, Latino Commission on AIDS, League of United Latin American Citizens, Mexican American Legal Defense and Educational Fund, National Conference of Puerto Rican Women, Inc., National Council of La Raza, National Hispanic Foundation for the Arts, National Hispanic Media Coalition, National Institute for Latino Policy, National Latina Institute for Reproductive Health, National Puerto Rican Coalition, Inc.,, SER, United States Hispanic Leadership Institute, and the William C. Velasquez Institute.

A copy of the brief can be found here.

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