July 10, 2019
At the very end of a recent opinion, the First Circuit seemingly provided guidance on how bondholders can attack the constitutionality of Puerto Rico’s debt restricting act, PROMESA (The Puerto Rico Oversight, Management, and Economic Stability Act). However, the apparent guidance offered by the First Circuit may only be fool’s gold.
PROMESA was adopted by Congress in 2016 in response to a Supreme Court ruling that Puerto Rico’s instrumentalities were ineligible for municipal debt adjustment under chapter 9 of the United States Bankruptcy Code (“Bankruptcy Code”); PROMESA in turn provides statutory municipal debt provisions similar to chapter 9.
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