The U.S. Supreme Court ruled Monday that a Chapter 9 Bankruptcy Code provision preempts the restructuring law that Puerto Rico, which is facing a $70 billion debt crisis, had enacted in 2014. Attorneys tell Law360 why the decision is significant.
According to Mark D. Silverschotz, co-chair of Anderson Kill's Bankruptcy & Restructuring group:
Today’s decision confirms what most bankruptcy professional have already known: The 1984 Bankruptcy Code Amendments excluding Puerto Rico and D.C. from the definition of 'state' for purposes of authorizing Chapter 9 filings by a 'municipality' was devoid of meaningful legislative history, foolish in its enactment, and unequivocally clear in its expression. Justice Thomas’s well-reasoned 'structuralist' analysis puts the issue squarely back with Congress. Justice Sotomayor’s dissent states that 'the majority’s plain meaning syllogism is not without force. But it ignores this court’s repeated exhortations to read statutes in context of the overall statutory scheme,' but her argument — given the unequivocal language at issue — could not even convince Justices [Elena] Kagan and [Stephen] Breyer.