US Supreme Court

There are roughly 3.5 million people in the U.S. territory of Puerto Rico. However, the island has run up a debt of $70 billion. Officials are now saying that there's no way they can pay that money back. The territory is in danger of going bankrupt, and it looks to be traveling down that path very quickly.

To stop it, lawmakers had been hoping to use a statute from 2014 to do away with some of the debt. A lot of the debt is related to public utilities, and billions could have been slashed. However, the lenders were strongly objecting to that law being used, and the whole thing ended up before the Supreme Court. Recently, the court voted and came down in favor of the lenders. The decision was made by a vote of 5-2.

The 2015 Repeal

As noted, the law was created in 2014. It's called the Recovery Act. However, it was first shot down in 2015, when an appeals court voted against it and invalidated it. The move to take it to the Supreme Court was to get it overturned, but instead, the decision of the appeals court will stand.

The Deadline

This is going to need to be resolved, one way or the other, by the first of July. That's when Puerto Rico has to pay an installment of $1.9 billion, which it doesn't look like it will be able to do. U.S. lawmakers have been taking some steps, like creating a federal control board, the bill for which is working its way through the system now. They're trying to fast-track it before the deadline hits so that President Obama has time to sign it.

A Messy Situation

Even if the federal control board is created in time, this could get fairly messy, as Puerto Rico is running out of options. It will be important for residents to keep an eye on the situation, since bankruptcy could have a big impact on the country. The hope is that they can restructure the debt to make it more manageable, but everything is up in the air right now.