Supreme Court of the United States
Commonwealth of Puerto RICO, Petitioners v. Franklin California Tax-Free Trust
June 13, 2016195 L. Ed. 2d 298
Summary
The Court held that the Federal Bankruptcy Code preempts Puerto Rico's Recovery Act, a state bankruptcy law for insolvent municipalities, because Puerto Rico remains a "State" under the Code's preemption provision despite being excluded from the definition of "State" for Chapter 9 debtor eligibility. Justice Sotomayor dissented, arguing the preemption provision does not apply where municipalities are ineligible for Chapter 9 relief.