Lawmaker calls for probe into hike in bankruptcies

By THE STAR STAFF

Amid a sharp rise in both personal and commercial bankruptcies, District 19 (Mayagüez and San Germán) Rep. Lilibeth “Lilly” Rosas Vargas has introduced a resolution to investigate the economic implications of the trend.

The measure, House Resolution 493, highlights that bankruptcies in Puerto Rico increased by 50% just in 2021, a trend that has not stopped. Rosas Vargas said the resolution seeks to uncover the real consequences of the surge and its impact on the island’s economic health.

“The rise in bankruptcies is a clear sign of economic deterioration, which affects the labor market and social stability,” Rosas Vargas stated. “It’s essential to understand the underlying causes and develop informed public policy to address the issue.”

Just weeks ago, Puerto Rico Chamber of Commerce President Margaret Ramírez warned that nearly 4,500 business owners had filed for bankruptcy in 2025 due to rising operational costs.

The resolution also notes that since 2022, consumer debt has reached approximately 48% of disposable personal income -- a level historically associated with increased bankruptcy filings.

Rosas Vargas emphasized the need to examine whether recent hikes in the minimum wage and essential services such as water and electricity are contributing to the trend.

“We urgently need economic policies focused on fiscal stability,” she said.

The legislator also urged the government to act swiftly to prevent further bankruptcies and safeguard Puerto Rico’s economic and social development. She pointed to international models, such as those in Japan and the European Union, as potential frameworks for local solutions aimed at reducing bankruptcy rates. For instance, Japan’s model for reducing bankruptcies focuses on early intervention and robust restructuring, with a new legal framework set to be implemented by 2026. The strategy combines out-of-court workouts overseen by neutral third parties with court-approved supermajority debt adjustments to help struggling businesses recover before they become insolvent.