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Arthur J. Gonzalez is a senior fellow at New York University School of Law and member of the PROMESA oversight board in charge of resolving the Puerto Rican government-debt crisis. Before his retirement from the bench,he was chief judge of the United States Bankruptcy Court for the Southern District of New York.
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The Bankruptcy Act of 1898 was the first United States Act of Congress involving bankruptcy to give companies an option of being protected from creditors. Previous attempts at federal bankruptcy laws had lasted,at most,a few years.
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Chapter 9,Title 11,United States Code is a chapter of the United States Bankruptcy Code,available exclusively to municipalities and assisting them in the restructuring of their debt. On July 18,2013,Detroit,Michigan became the largest city in the history of the United States to file for Chapter 9 bankruptcy protection. Jefferson County,Alabama,in 2011,and Orange County,California,in 1994,are also notable examples. The term 'municipality' denotes "a political subdivision or public agency or instrumentality of a State," but does not include a state itself. States are therefore unable to file for bankruptcy even though they have defaulted in their obligations.
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The Puerto Rican government-debt crisis was a financial crisis affecting the government of Puerto Rico. The crisis began in 2014 when three major credit agencies downgraded several bond issues by Puerto Rico to "junk status" after the government was unable to demonstrate that it could pay its debt. The downgrading,in turn,prevented the government from selling more bonds in the open market. Unable to obtain the funding to cover its budget imbalance,the government began using its savings to pay its debt while warning that those savings would eventually be exhausted. To prevent such a scenario,the United States Congress enacted a law known as PROMESA,which appointed an oversight board with ultimate control over the Commonwealth's budget. As the PROMESA board began to exert that control,the Puerto Rican government sought to increase revenues and reduce its expenses by increasing taxes while curtailing public services and reducing government pensions. These measures provoked social distrust and unrest,further compounding the crisis. In August 2018,a debt investigation report of the Financial Oversight and management board for Puerto Rico reported the Commonwealth had $74 billion in bond debt and $49 billion in unfunded pension liabilities as of May 2017. Puerto Rico officially exited bankruptcy on March 15,2022.
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The Puerto Rico Oversight,Management,and Economic Stability Act (PROMESA) is a U.S. federal law enacted in 2016 that serves as a custom-made Bankruptcy law for Puerto Rico. It establishes a process for restructuring debt,and expedited procedures for approving critical infrastructure projects in order to combat the Puerto Rican government-debt crisis. Through PROMESA,the US Congress established a Financial Oversight and Management Board,known colloquially in Puerto Rico as "la junta," to oversee the debt restructuring. With this protection the then-governor of Puerto Rico,Alejandro García Padilla,suspended payments due on July 1,2016. The FCB's approved fiscal austerity plan for 2017-2026 cut deeply into Puerto Rico's public service budget,including cuts to health care,pensions,and education,in order to repay creditors. By May 2017,with $123 billion in debt owed by the Puerto Rican government and its corporations,the FCB requested the "immediate" appointment of a federal judge to resolve the "largest bankruptcy case in the history of the American public bond market."
State defaults in the United States are instances of states within the United States defaulting on their debt. The last instance of such a default took place during the Great Depression,in 1933,when the state of Arkansas defaulted on its highway bonds,which had long-lasting consequences for the state. Current U.S. bankruptcy law,an area governed by federal law,does not allow a state to file for bankruptcy under the Bankruptcy Code. Certain politicians and scholars have argued that the law should be amended to allow states to file for bankruptcy.
Financial Oversight and Management Bd. for Puerto Rico v. Aurelius Investment,LLC,590 U.S. ___ (2020),was a United States Supreme Court case in which the Court held that appointments to the Financial Oversight and Management Board for Puerto Rico are not subject to the restrictions in the Appointments Clause of the U.S. Constitution. The Court held that all officers of the United States are subject to the Appointments Clause even if their duties relate to Puerto Rico. However,the power they exercise must be primarily federal in nature for the Clause to apply. If the officer exercises powers primarily of a local nature,even if created by federal law,then the officer is not "of the United States" and is exempt from compliance with the Clause. As members of the Board are primarily concerned with the governance of Puerto Rico,even though their decisions have potentially nationwide consequences,their powers are primarily local in nature and need not be appointed in compliance with the Clause.
Financial Oversight and Management Board for Puerto Rico (FOMBPR),colloquially known as La Junta de Control/Supervisión Fiscal is a government entity whose role to revise and approve the budget and obligations of the government of Puerto Rico was created by federal law PROMESA.
References
- 1 2 "President Obama Announces the Appointment of Seven Individuals to the Financial Oversight and Management Board for Puerto Rico". August 31, 2016.
- ↑ Reviewed at:
• Barton Swaim (2014, Nov. 22) "How Christianity Explains Beauty and Suffering," Wall Street Journal.
• Robert T. Miller (2015, February). "Experience Explained," First Things.
• Todd Zywicki (2015, February 2), "Review of David Skeel, True Paradox: How Christianity Makes Sense of Our Complex World," Washington Post. - ↑ Reviewed at:
• Louis Massard (2012), "A Review of The New Financial Deal by David Skeel", 16 N.C. Banking Inst. 16(1), pp. 435-63. - ↑ Reviewed at:
• Janis Sara (2003), "Book Review: Debt's Dominion: A History of Bankruptcy Law in America, by David A. Skeel Jr," Osgoode Hall Law Journal, 41(4), pp. 734-740.