Puerto Rico Recovery Act Ruling Reaffirms Creditor Expectations

On February 6, 2015, the U.S. District Court for the District of Puerto Rico issued a decision holding Puerto Rico’s Public Corporations Debt Enforcement and Recovery Act unconstitutional, noting that it was “not a close case.” The District Court’s decision reaffirms the principle that States and Territories cannot enact laws that purport to provide “bankruptcy-like” relief for their municipalities.

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