HR 870 is a bill that will allow Puerto Rico to use chapter 9, which is part of the U.S. bankruptcy code. HR 870 is also known as the Puerto Rico Chapter 9 Uniformity Act of 2015. The bill was introduced in the House of Representatives by Puerto Rico’s Resident Commissioner, Pedro Pierluisi. An identical bill, S 1774, was introduced in the Senate, where Puerto Rico has no representation.


This image, courtesy of the Puerto Rico Fiscal Stability Coalition, they list some of the other people and organizations that also support HR 870.

The list is growing.

Often when you read about Puerto Rico’s debt crisis, you’ll read that “Puerto Rico is going to go bankrupt.” This isn’t correct. Chapter 9 is a special part of the bankruptcy code which is only for municipalities. A municipality is defined as a city, a school district, a public utility, or some other entity that belongs to a State. Under chapter 9 of the bankruptcy code, a State can allow its municipalities to declare bankruptcy.

In the bankruptcy code, it says that the term “State” includes Puerto Rico “except for the purpose of defining who may be a debtor under chapter 9.” This section was added in 1984. Before that time, Puerto Rico could have allowed its municipalities to restructure their debts. HR 870 and S 1774 want to remove the “except for chapter 9” part of the code.

Here’s why.

Puerto Rico has some municipalities, including the government electric company, PREPA, that can’t pay their creditors. Chapter 9 would let Puerto Rico allow these municipalities to restructure their debts — that is, make new arrangements — in an orderly way. Bankruptcy makes sure that all creditors have a way of working things out with the municipalities, instead of having creditors sue for their payments, and sue each other. Bankruptcy also allows the government to focus on taking care of the land and people of Puerto Rico, rather than having to divert so much of their funds to debt service.

Both conservative and liberal people and organizations have spoken up for HR 870. They have a lot of good reasons.

  • It is right and fair for Puerto Rico to be treated the same as the States, as Jeb Bush has said.
  • Puerto Rico is in agreement on the need for the bill across all the parties, as Pedro Pierluisi has said.
  • Chapter 9 will allow a fair and orderly resolution, as The Los Angeles Times said in an editorial.
  • HR 870 will prevent the need for a bailout, as Americans for Tax Reform have said.
  • It will help the economy of Puerto Rico to get back on track, as the Latino Coalition has said.

The editorial board of the Miami Herald, which is listed on the poster above, made an additional point in an article supporting HR 870:

Full statehood may be the only enduring solution that gives its people equality and establishes a framework for sustained prosperity after it emerges from crisis.



4 Responses

  1. […] HR 870, the bill that would stop Puerto Rico’s exclusion from the use of chapter 9 of the U.S. bankruptcy code, would give Puerto Rico the same treatment as States. “We are 3.5 million American citizens living in Puerto Rico,” Pierluisi said after discussing inequalities in federal support between States and Puerto Rico. “Why treat us differently? It’s unAmerican.” […]

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