Puerto Rico asks Congress to forgive debt

Puerto Rico asked Congress to restructure the island's debt by invoking "Super Chapter 9" Thursday.

At the hearing, Puerto Rico Governor Alejandro Garcia Padilla and Antonio Weiss, from the U.S. Treasury Department, requested bankruptcy measures.

The unprecedented bankruptcy measures would enable Puerto Rico to leave its constitutional debt. And while no U.S. state has the authority to rewrite its constitutional credit debt, critics contend that if Puerto Rico is forgiven of its debt, other states may follow suit and municipal debt markets will be stirred up, raising borrowing costs for various municipalities and states throughout the country. 

“By giving Puerto Rico the authority to completely disregard the rule of law and void Constitutional guarantees to bondholders, Congress would be establishing a precedent that would destroy the municipal market,” Henry Chanin, a Puerto Rican bondholder, retired educator, and member of the Main Street Bondholder coalition, said. “This would put the retirement savings of millions across the country at risk."