U.S. Senators Richard Blumenthal of Connecticut and Chuck Schumer of New York have introduced legislation to let Puerto Rico’s municipalities and public corporations declare bankruptcy, and settle more than $70 billion in debt. The legislation would allow those public entities to file for Chapter 9 bankruptcy, just like U.S. cities can.
Right now, the federal bankruptcy laws don’t apply to Puerto Rico because it’s a commonwealth, not a state. Puerto Rico’s Governor said in June that the island’s municipalities and corporations would be unable to pay all of their debts.
Blumenthal and Schumer introduced their legislation on Wednesday. It’s identical to a bill introduced in the house by Puerto Rico’s non-voting U.S. Congressman, Pedro Pierluisi. His bill died in the house last summer, and was reintroduced this year. And now, that bill has stalled due to lack of Republican support. The Senate legislation is supported by one Independent and seven Democrats, including Chris Murphy of Connecticut and Kirsten Gillibrand of New York.
No Republicans have co-sponsored the Senate legislation. Republicans control both the House and the Senate.