House Republicans doubt benefits of Chapter 9 for Puerto Rico: statement

Reuters News
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Posted: Jul 08, 2015 5:22 PM

WASHINGTON/NEW YORK (Reuters) - U.S. Republicans on a House committee expressed doubts on Wednesday about the benefit of extending federal bankruptcy laws to Puerto Rico and said they wanted to see more reforms in the U.S. territory before opening the door to bankruptcy.

Puerto Rico is trying to restructure at least part of its $72 billion in debt and is pushing for Congress to allow its municipalities to file under chapter 9 of the U.S. bankruptcy code. Currently Puerto Rico is excluded from the law.

The House Judiciary Committee is considering a bill reintroduced in February by Puerto Rico's resident commissioner, Pedro Pierluisi, that would change the bankruptcy code to include Puerto Rico. The likelihood the bill will make it through the Republican-controlled committee is in doubt.

"A general concern was expressed that to provide Puerto Rico's municipalities access to Chapter 9 of the bankruptcy code would not, by itself, solve Puerto Rico's difficulties," Bob Goodlatte, chairman of the Judiciary Committee, and Tom Marino, chairman of its subcommittee on regulatory reform, commercial and antitrust law, said in a joint statement.

Pierluisi's office was not immediately available to comment.

High profile figures have recently joined the chorus supporting access to Chapter 9 for Puerto Rico, including U.S. Democratic presidential hopeful Hillary Clinton, who this week called for a change in the law.

The committee's statement went on to say that Puerto Rico's debt crisis was "associated with underlying, structural economic problems" and that those problems need to be addressed.

Representative Raul Labrador, a conservative Idaho Republican who was born in Puerto Rico, said on a conference call on Wednesday that he wanted to see a concrete plan from Puerto Rico's authorities addressing the debt crisis.

"I don't think that any of us are closed off to allowing Chapter 9. We just want to make sure that we see some real reforms," said Labrador, also a member of the Judiciary Committee.

"What are the reforms that they are going to make to make sure this doesn't happen again?"

(Reporting by Edward Krudy ine New York and Susan Corwell in Washington; Editing by Bernard Orr and Steve Orlofsky)