§2163 — Title 48 Territories and Insular Possessions | U.S. Code

Summary

Under the limits in subchapters I and II, a covered territory keeps the power to run its government and its agencies and to decide how to spend money. A territory law that reorganizes debts or pauses payments cannot force a creditor to accept that change if the creditor does not agree — but only to the extent the law stops payment of principal or interest by an entity not described in section 109(b)(2) of title 11. A court judgment under such a law also cannot bind a creditor who did not agree. Illegal executive orders that change the rights of debt holders or move money between territorial agencies or to the territory are cancelled by this chapter.

Title 48, §2163

Territories and Insular Possessions — Source: USLM XML via OLRC

Subject to the limitations set forth in subchapters I and II of this chapter, this subchapter does not limit or impair the power of a covered territory to control, by legislation or otherwise, the territory or any territorial instrumentality thereof in the exercise of the political or governmental powers of the territory or territorial instrumentality, including expenditures for such exercise, but whether or not a case has been or can be commenced under this subchapter—

(1)a territory law prescribing a method of composition of indebtedness or a moratorium law, but solely to the extent that it prohibits the payment of principal or interest by an entity not described in section 109(b)(2) of title 11, may not bind any creditor of a covered territory or any covered territorial instrumentality thereof that does not consent to the composition or moratorium;

(2)a judgment entered under a law described in paragraph (1) may not bind a creditor that does not consent to the composition; and

(3)unlawful executive orders that alter, amend, or modify rights of holders of any debt of the territory or territorial instrumentality, or that divert funds from one territorial instrumentality to another or to the territory, shall be preempted by this chapter.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in par. (3), was in the original “this Act”, meaning Pub. L. 114–187, June 30, 2016, 130 Stat. 549, known as the Puerto Rico Oversight, Management, and Economic Stability Act and also as PROMESA, which is classified principally to this chapter. For complete classification of this Act to the Code, see

Short Title

note set out under section 2101 of this title and Tables.

§2163 Reservation of territorial power to control territory and territorial instrumentalities