World Economy

Puerto Rico Asks for Clemency

Puerto Rico Asks for ClemencyPuerto Rico Asks for Clemency

Puerto Rico on Friday asked the US Supreme Court to overturn a ruling that blocks the restructuring of the commonwealth’s public agencies.

In a petition seeking the court’s review, which was provided by one of the island’s lawyers, Puerto Rico said the lower court erred in concluding that US bankruptcy law blocks the restructuring of the agencies’ debts, Reuters reported.

Puerto Rico also said the lower court decision leaves its public utilities in a legal “no man’s land” because neither federal law nor the island’s own law permits the needed restructuring.

“That decision leaves Puerto Rico’s public utilities, and the 3.5 million American citizens who depend on them, at the mercy of their creditors,” the commonwealth said. “This court’s review is warranted–and soon.”

A US appeals court in July affirmed a lower court decision to strike down Puerto Rican legislation aimed at granting local municipalities the right to enter bankruptcy.

Puerto Rico passed the so-called Recovery Act last year to give certain public corporations, with around $20 billion in debt, the ability to restructure financially in an orderly process. Puerto Rico is currently struggling with debt of around $72 billion.

Meanwhile, a US suburban city near Louisville has filed for bankruptcy, crippled by an $11.4 million jury verdict in a dispute over land and money with a truck-driving school.

That’s nearly four times the budget for Hillview, a town of about 9,000 people south of Louisville.

The city entered its Chapter 9 bankruptcy filing Thursday in federal court.

The filing is meant to keep the city from digging a deeper hole. City Attorney Tammy Baker said Friday that it stops interest from being applied to the multimillion-dollar judgment as city leaders look to resolve the town’s financial problems.

She says city services, including police, will not suffer. The city’s annual budget is about $3 million.