The Commonwealth of Puerto Rico’s efforts to deal with more than $70 billion in debt have been a magnet for media scrutiny during the last two years. A question frequently asked in connection with the island territory’s struggles to stay afloat is whether Puerto Rico, as an unincorporated territory of the U.S., could resort to a bankruptcy filing as a means of alleviating its financial problems.
Puerto Rico, however, is statutorily barred from seeking protection under the Bankruptcy Code. In addition, Puerto Rico’s municipalities and instrumentalities cannot be debtors under chapter 9. On June 28, 2014, Puerto Rico’s governor, Alejandro … Read more