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García Padilla Remains Cautious Over Recovery Act Hearings

By on March 24, 2016

SAN JUAN — A day after the U.S. Supreme Court heard arguments on the constitutionality of the Puerto Rico Public Corporations Debt Enforcement & Recovery Act, Gov. Alejandro García Padilla refrained from claiming a victory.

While some justices seemed to support the island, García Padilla said he wanted to wait for the final ruling, which is not expected until June.

“I congratulate people who watched the hearings and noticed more what the justices said rather than what the lawyers said,” he said.

García Padilla said that since the case was not about status, the general public was more objective, contrary to what happened in the Pueblo v. Sánchez Valle case on double jeopardy, which is also being evaluated by the U.S.’ top court.

“[This case] went well, but we cannot claim a victory,” he said.

The governor added that the oral hearings show that Puerto Rico is trying to solve its problems though the Recovery Act and is seeking the tools to be able to fix its fiscal crisis. “We are not seeking a handout,” he said.

Seven U.S. Supreme Court justices heard arguments Tuesday on whether the island could legally create its own bankruptcy law for certain public corporations. The Recovery Act was declared unconstitutional by the district and appeal courts, which contended it was preempted by the federal bankruptcy law.

The four liberal justices appeared to support the island’s arguments in favor of the law’s constitutionality, as the commonwealth seems to have no other alternatives presently to deal with the crisis.

In 1984, Congress said Puerto Rico, as a U.S. territory, could not use bankruptcy laws that govern states. But the federal bankruptcy law also says that no state can pass local debt-restructuring laws, and in another provision in the law, Puerto Rico is defined as a state.

At least one of the justices could not understand why Congress left Puerto Rico in a limbo. “Why would Congress put Puerto Rico in this never-never land?” Justice Ruth Bader Ginsburg asked during Tuesday hearing.

Meanwhile, the García Padilla administration continues to wait for congress action over its fiscal crisis. House Speaker Paul Ryan (R-Wis.) told reporters Tuesday that Congress will take up a Puerto Rico debt-relief alternative next month. The island could go into insolvency as early as May, as it faces significant debt-service payments, for which the government says it has not enough money to meet in full.

 

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