Earlier this week, former Secretary of State and current Democratic presidential candidate Hillary Rodham Clinton announced her support for allowing Puerto Rico’s public entities access to U.S. bankruptcy law.
In her remarks Secretary Clinton, a former Member of Congress, said that “as a first step, Congress should provide Puerto Rico the same authority that states already have to enable severely distressed government entities, including municipalities and public corporations, to restructure their debts under Chapter 9 of the Bankruptcy Code.”
She is joined in her support of Chapter 9 access for the territory of Puerto Rico by another candidate for the Democratic nomination for president, Senator Bernie Sanders (VT). Senator Sanders issued a statement last night explicitly stating that he “strongly believe[s] Puerto Rico should be afforded the same bankruptcy protections that exist for municipalities across the United States.”
Senator Sanders went even further stating that Congress “need[s] to do everything [it] can to allow Puerto Rico to restructure its debt in a rational way that does not harm its people, ordinary investors or pension funds in the United States. Chapter 9 protections would be a good first step.”
Secretary Clinton and Senator Sanders are not the only presidential candidates in support of Chapter 9 access for Puerto Rico. Former Florida Governor Jeb Bush, who is seeking the Republican nomination, stated his support back in April. Bush was clear in his belief that “Puerto Rico ought to be treated as other states are treated as it relates to restructuring.”
Unlike the Democratic candidates, there appears to be disagreement among the Republicans. Former Arkansas Governor Mike Huckabee opposes extending Chapter 9 access to Puerto Rico. “Puerto Rico is a commonwealth, not a state and should not be allowed to file (bankruptcy) under Chapter 9,” he explained.
Other Senate Republicans who have announced their intention to seek the presidency have not confirmed their position on the extension of Chapter 9 Puerto Rico’s municipalities and related public entities. They may be forced to do so if Senate legislation to amend Chapter 9 is introduced.
Yesterday, Resident Commissioner Pedro Pierluisi laid out that “the crisis in Puerto Rico is real, and it must be confronted with composure, competence and candor. …the challenges [Puerto Rico] face[s] are structural in nature and therefore require structural solutions, at both the Puerto Rico level and the federal level.”