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Former P.R. Governor: Island Needs Bankruptcy Law As Deadline Nears

With the August 1st deadline steadily approaching, Puerto Rico is in need of “some certainty in the process” Former Governor of Puerto Rico, Luis Fort
This Sept. 23, 2014 photo, shows an aerial view of the Santurce neighborhood in San Juan, Puerto Rico. Ricardo Arduengo / AP

With an August 1st deadline steadily approaching, Puerto Rico is in need of “some certainty in the process,” said former Puerto Rico governor Luis Fortuño, who spoke on Tuesday to MSNBC’s José Díaz-Balart about the island's dire economic situation.

Fortuño agreed with Republican presidential hopeful Jeb Bush, who said to Jose Díaz-Balart in an exclusive Telemundo interview on Monday that Puerto Rico should be allowed to restructure some of its public entities's debts under Chapter 9. A bill introduced in the House several months ago has not moved forward. Recently the Senate introduced a similar bill.

Puerto Rico will face lawsuits if they cannot make payments on August 1st, said Fortuño.

“Those are PFC bonds and those are held on island so it will actually be affecting creditors on island to a certain degree some credit unions and individuals,” said the former governor.

The Puerto Rico Public Finance Corporation – a subsidiary of the U.S. territory's Government Development Bank – doesn't have tens of millions of dollars to give its bondholders by Saturday's deadline, Victor Suarez, the Puerto Rican governor's chief of staff, told reporters in San Juan on Monday, according to CNBC.

There has been a recent calling for the U.S. government to intervene and to treat Puerto Rico as a state in the ongoing debt proceedings. By doing this, it will allow the commonwealth to open Chapter 9 filings similar to what was used in Detroit.

“We must give them more flexibility to solve the problem,” Jeb Bush said in MSNBC’s The Rundown with José Díaz-Balart . “Reform the bankruptcy law for Puerto Rico. Just like Detroit had that process, maybe Puerto Rico will also need to do the same thing. But it’s not allowed by federal law and Congress must act.”

Fortuño referenced what happened in 1984. When Chapter 9 of the bankruptcy code was amended by Congress, it did not include Puerto Rico.

“It actually left out the territories,” said Fortuño. “The state cannot file for bankruptcy but some of the public corporations perhaps could and that’s what’s being debated.”

Puerto Rico is finally starting to see the downside of being a U.S. territory, said Fortuño, who is pro-statehood and was governor under the Partido Nuevo Progresista (New Progressive Party, known as PNP) which advocates for statehood.

“Puerto Rico has been a territory for 120 years,” said Fortuño. “At a time, people thought being a territory was an advantage. It has actually turned out to be a disadvantage from the economic and social point of view.”

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