By Patrick Rucker
WASHINGTON (Reuters) - U.S. lawmakers on Wednesday debated a bill aimed at restructuring Puerto Rico's crushing debt load, while setting guidelines to suspend addressing creditor lawsuits as the U.S. commonwealth seeks to reform its economy.
After several false starts, the mark-up of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) began in the House Natural Resources Committee. Lawmakers are pushing to send President Barack Obama a bill before Puerto Rico's July 1 deadline for making about $1.9 billion in debt payments.
Puerto Rico owes creditors about $70 billion, which its governor has said it cannot pay. Some creditors have already filed lawsuits while trying to work out restructurings while more legal action is expected.
The committee rejected a plan that would allow investor lawsuits to continue while officials try to mediate disputes among creditors to the island, where the poverty rate among the U.S. citizens is a staggering 45 percent.
PROMESA would establish a very powerful federally appointed financial oversight board to work out the debt restructurings and establish disciplined budgeting.
As the debate unfolded, the panel also rejected a plan to formally prioritize Puerto Rico's General Obligation debt, which constitutionally are senior to all other debt.
Committee Chairman Rob Bishop, a Utah Republican, said he opposed lawmakers giving special protection to any investor group, calling it misguided, particularly before the oversight board was formed, reviewed the law and performed a financial review.
"Until that takes place, we don't actually know the situation," Bishop said. "This would give priority (to investors) that may not deserve that particular priority."
With the House and Senate set to begin a week-long Memorial Day holiday break at the end of this week, debate of the bill by the full House is not expected until sometime in June.
(Reporting by Patrick Rucker; Additional reporting by Richard Cowan in Washington; Writing by Daniel Bases; Editing by Richard Chang)