The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) is the federal legislation that was enacted to provide a special bankruptcy framework for Puerto Rico because Puerto Rico is ineligible to file for Chapter 9 of the Bankruptcy Code. 48 U.S.C. §§2101 et seq. An important component of PROMESA is the establishment of a Financial Oversight Board (FOB) with oversight powers over the financial affairs of the Puerto Rican government and sole authority over the Puerto Rico bankruptcy cases. 28 U.S.C. §§2121(b), 2121(d), and 2124(j)(1).

The Puerto Rico bankruptcy cases are consequential not only for people of Puerto Rico, but also for the other citizens of the United States. The Puerto Rico bankruptcy cases are consequential for Puerto Ricans because they will leave an indelible mark on the Puerto Rican economy and Puerto Rican society for the foreseeable future. The Puerto Rican bankruptcy cases are consequential for the United States and the public debt markets because they are the largest municipal bankruptcy cases that have been filed in the history of the United States. Heather Long, Puerto Rico Files for Biggest US Municipal Bankruptcy, CNN Business (May 3, 2017).

The Puerto Rico Economic Decline and Hurricane Maria. Historically Puerto Rico's economy was assisted by federal tax policy. Scott Greenberg & Gavin Elkins, Tax Policy Helped Create Puerto Rico's Fiscal Crisis, Tax Foundation (June 30, 2015). Internal Revenue Code §936 provided United States corporations a tax exemption from income originating in Puerto Rico. Id. The repeal of Internal Revenue Code §936, and the 2008 recession propelled Puerto Rico into a 10-year recession from which it has not recovered. John W. Schoen, Here's How an Obscure Tax Change Sank Puerto Rico's Economy, CNBC (Sept. 26, 2017). During the period from 2005 to 2013 Puerto Rico lost 5.5 percent of its population. Jaison R. Abel and Richard Deitz, The Causes and Consequences of Puerto Rico's Declining Population, The New York Federal Reserve Bank (2014).

Puerto Rico heavily borrowed to compensate for the decline in tax revenues after the repeal of §936. Eva Lloréns Vélez, Among Puerto Rico Debt Investigator's Recommendations: Debt-Issuance Validations to Regain Investor Confidence (Aug. 21, 2018). It is estimated that Puerto Rico's public debt is $71.1 billion. Laura Sullivan, How Puerto Rico's Debt Created A Perfect Storm Before The Storm, NPR (May 2, 2018). The Puerto Rico debt is larger than its annual GDP. Id.

Hurricane Maria devastated Puerto Rico. Not only did Hurricane Maria cause $90 billion in damage, but also it was third costliest hurricane in the history of the United States. Fast Facts Hurricane Costs. 2,975 deaths have been attributed to Hurricane Maria. Sheri Fink, Nearly a Year After Hurricane Maria, Puerto Rico Revises Death Toll to 2,975, The New York Times (Aug. 28, 2018). At least 1.1 million households have applied for FEMA disaster aid. Andres Viglucci, Half of Puerto Rico's housing was built illegally. Then came Hurricane Maria, Miami Herald (Feb. 14, 2018). Hurricane Maria caused significant damage to 250,000 homes. Id. The Center for Puerto Rican Studies estimates that between 2017 and 2019 that 470,335 residents will migrate from Puerto Rico. Edwin Meléndez and Jennifer Hinojosa, Estimates of Post-Hurricane Maria Exodus from Puerto Rico, Center for Puerto Rican Studies (Oct. 2017).

The Feasibility Requirement. A central requirement of the confirmation of a plan in a municipal bankruptcy or in a corporate reorganization case is that the plan be feasible. 11 U.S.C. §§943(b)(7) & 1129(a)(11). In order for a plan to be confirmed PROMESA requires that a plan be feasible and in the best interests of creditors. 28 U.S.C. §2174(b)(6). The feasibility test requires that a plan can only be confirmed if confirmation is not likely to be followed by liquidation or the need for further financial reorganization. In re Chicago Investments, 470 B.R. 32, 107 (Bankr. D. Mass. 2012). The central inquiry is whether there is a reasonable probability that the plan provisions can be effectuated. In re Olde Prairie Block Owner, 467 B.R. 165, 169 (Bankr. N.D. Ill. 2012). A plan proponent must provide concrete proof of sufficient cash flow to meet its operations and plan obligations. In re Multiut, 449 B.R. 323, 347 (Bankr. N.D. Ill. 2011). The feasibility test requires courts to scrutinize carefully the plan to determine whether it offers a reasonable prospect of success and is workable. 7 Collier on Bankruptcy ¶ 1129[11] (16th ed. 2018).

A Marshall Plan for Puerto Rico. Puerto Rico is a territory of the United States. Puerto Rico v. Sanchez Valle, 136 S.Ct. 1863, 1868 (2016). In 1950 and 1952 Congress enacted legislation to grant Puerto Rico autonomy that was similar to the autonomy of a state. Puerto Rico v. Sanchez Valle, 136 S.Ct. 1863, 1874 (2016). Puerto Rico, like a state, is an autonomous political entity, sovereign over matters not ruled by the U.S. Constitution. Id.

Federal intervention is essential if Puerto Rico is going to prosecute a feasible plan. The federal government is the only entity that has the economic resources and the legal authority to implement an economic recovery package for Puerto Rico that will enable it to successfully implement a plan under PROMESA. Historically, the Puerto Rican economy has been stimulated by federal tax legislation that has induced companies to locate Puerto Rico. The fundamental component of a Marshall Plan for Puerto Rico is to enact enterprise zone legislation to attract and retain private industry. Absent a strong private sector, Puerto Rico will lack the tax base to fund a plan under PROMESA.

Another component of federal intervention is the rebuilding of Puerto Rico's infra-structure and housing stock. Puerto Rico's electrical grid and tele-communications system must be rebuilt. This is similar to what happened in New Orleans after Hurricane Katrina. Jeff Adelson, After Hurricane Katrina: How Federal Aid Helped the Region Rebuild, Improve, The Advocate (June 20, 2015). The federal government expended over 71 billion dollars in Southern Louisiana to rectify the damage done by Hurricane Katrina. Id. Thus, there is recent precedent for federal for federal intervention to rebuild Puerto Rico's infra-structure.

Similarly, the rebuilding of Puerto Rico's housing stock must be a priority. As of May 1, 2018, FEMA has received 1,118,862 million applications for disaster assistance. Nicole Acevedo and Istra Pacheco, No Deeds, No Aid to Rebuild Homes: Puerto Rico's Reconstruction Challenge, NBC News (May 8, 2018). Hurricane Maria destroyed 70,000 homes and damaged 250,000 homes. Andres Viglucci, Half of Puerto Rico's housing was built illegally. Then came Hurricane Maria, Miami Herald (Feb. 14, 2018).

The federal government has to rectify Puerto Rico's Medicaid funding. Puerto Rico does not receive the same level of Medicaid reimbursement as do the states. Nathaniel Weixel, Puerto Rico Faces Looming Medicaid Crisis, The Hill (Oct. 7, 2017). The federal government reimburses the states 57 percent of their Medicaid costs. Nathaniel Weixel, Puerto Rico Faces Looming Medicaid Crisis, The Hill (Oct. 7, 2017). However, Puerto Rico is only reimbursed 15 percent to 20 percent of its Medicaid costs by the federal government. Id. Nearly 50 percent of Puerto Rico's population receives Medicaid. Id. Federal intervention is necessary to ensure that adequate health care is provided in Puerto Rico.

The fourth issue that should be addressed is public corruption. Puerto Rico has a problem with public corruption Nancy San Martin, Corruption Scandals Plague Governments in Puerto Rico, Miami Herald (Nov. 22, 2001). The Public Integrity Division of the United States Attorney's Office in Puerto Rico should be augmented to ensure that it has the resources to prosecute public corruption.

A Marshall Plan is Necessary to Effectuate PROMESA and to Protect the Interested Parties in the Puerto Rico Bankruptcy Cases. The need for federal intervention is based on several factors. In order for a PROMESA plan to be feasible there has to be a reliable tax base in Puerto Rico. Since Hurricane Maria approximately 179,000 persons have departed Puerto Rico. Id. A natural inference that can be drawn from the massive exodus from Puerto Rico is that many Puerto Ricans lack faith in the government of Puerto Rico and the FOMB to solve Puerto Rico's problems. In order to induce Puerto Ricans to remain and to move back to Puerto Rico there must be a realistic hope that Puerto Rico will be resurrected and transformed to a fiscally sound government that provides essential services to its residents.

The need for federal intervention is also necessary to protect Puerto Rico's creditors. Puerto Rico is competing in the world economy. Puerto Rico's ability to retain and attract jobs is dependent upon the quality of its infrastructure. The stronger the Puerto Rico economy becomes the more likely Puerto Rico will be able to effectuate a plan and to repay its creditors.

Conclusion. The Puerto Rico bankruptcy cases cannot fail because of the adverse impact that they would have on the American public debt markets. The federal government is the only entity that is equipped to effectually resolve economic problems. Therefore, the federal government should enact a Marshall Plan for Puerto Rico.

Carlos J. Cuevas is a solo practitioner in Yonkers, N.Y., and a research associate at the University of Houston School of Law.