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  • Writer's pictureThe San Juan Daily Star

Puerto Rico bankruptcies increased in 2023

By The Star Staff

Puerto Rico experienced 4,435 bankruptcy court petitions in 2023, which represented a 16.4% year-over-year (YoY) increase from 3,810 petitions in 2022, according to a report from the firm Boletín de Puerto Rico.

The number of bankruptcies submitted in 2022 was 1.4% less than the number of bankruptcies filed in 2021, when 3,863 bankruptcies were recorded.

The island recorded 3,003 Chapter 13 cases in 2023, marking a 23.6% YoY increase. Chapter 13 bankruptcy, also referred to as the wage earners bankruptcy, offers debt adjustments for those with regular incomes.

Last year, 66 Chapter 11 cases were filed, representing a 34.7% YoY increase. A case filed under Chapter 11 of the U.S. Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. A plan of reorganization is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes.

Meanwhile, some 1,362 Chapter 7 filings were recorded, for a YoY increase of 3.2%. In 2022, the number of Chapter 7 filings was 1,320. Chapter 7 bankruptcy is a process that allows a person to ask a bankruptcy court to wipe out most of their debts. It is also known as liquidation, or straight bankruptcy.

Meanwhile, four Chapter 12 cases were filed in Puerto Rico in 2023, a 63.6% YoY decrease. Chapter 12 is designed for “family farmers” or “family fishermen” with “regular annual income.” It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts.

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