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Use bankruptcy to help set Puerto Rico on new path – The Boston Globe

Puerto Rico made history this week, and not in a good way. The US territory defaulted on a $58 million bond payment due on August 3. With a total debt of about $70 billion, Puerto Rico is facing a gloomy economic crisis devoid of clear remedies. Governor Alejandro García Padilla, who has said time and again that the island cannot pay its debts, has put together a team to work on a voluntary debt-restructuring plan by the end of the summer. But in order for the reorganization to work out, Congress must help Puerto Rico by allowing the island’s public agencies to declare bankruptcy, just as Detroit did in 2013. Access to bankruptcy courts will provide a much-needed fresh start for Puerto Rico and its 3.5 million residents, and amounts to the most sensible policy remedy for the island in the short term.

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