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A Two-Step Plan For Puerto Rico, Clayton P. Gillette, David A. Skeel Jr.
A Two-Step Plan For Puerto Rico, Clayton P. Gillette, David A. Skeel Jr.
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Few still believe that Puerto Rico is capable of meeting all of its financial obligations and continuing to provide basic services. The territory is already in default, and conditions are rapidly deteriorating. Is there a way forward? We think there is. In this short article, we outline a two-part plan for correcting Puerto Rico’s most urgent fiscal and financial problems.
The first step is to create an independent financial control board that has authority over Puerto Rico’s budgets and related issues. Notwithstanding concerns that an externally imposed financial control board (FCB) may interfere with the decision making processes of democratically …
Governance Reform And The Judicial Role In Municipal Bankruptcy, Clayton P. Gillette, David A. Skeel Jr.
Governance Reform And The Judicial Role In Municipal Bankruptcy, Clayton P. Gillette, David A. Skeel Jr.
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Recent proceedings involving large municipalities such as Detroit, Stockton, and Vallejo illustrate both the utility and the limitations of using the Bankruptcy Code to adjust municipal debt. In this article, we contend that, to truly resolve the distress of a substantial city, municipal bankruptcy needs to do more than simply provide immediate debt relief. Debt adjustment alone does nothing to remedy the fragmented decision-making and incentives for expanding municipal budgets that underlie municipal distress. Unless bankruptcy also addresses governance dysfunction, the city may slide right back into financial crisis. Governance restructuring has long been an essential element of corporate bankruptcy. …