Floating Ashore: An Overview of Puerto Rico's Financial Crisis and Potential Restructuring Alternatives

Chapter 9 of the United States Bankruptcy Code, long considered a rare vehicle of last resort for eligible government entities, has recently become an increasingly prominent consideration as a method to relieve crippling financial bond obligations. For the Commonwealth of Puerto Rico, however, as a territory of the United States, relief under Chapter 9 is not an option for solving its staggering $70 billion debt and estimated $850 million deficit for the 2014 fiscal year. A restructuring of Puerto Rico's finances, therefore, must come from alternative strategies. This article provides an overview of Puerto Rico's debt crisis; sets forth the textual basis for Puerto Rico's exclusion from Chapter 9 of the Bankruptcy Code; and explores potential alternative strategies for Puerto Rico to restructure its finances.