Law360, New York ( July 15, 2015, 4:21 PM EDT) -- Puerto Rico encountered another roadblock in its efforts to resolve its looming debt crisis on July 6, 2015, when the U.S. Court of Appeals for the First Circuit affirmed the decision of the District of Puerto Rico that Puerto Rico's Debt Enforcement and Recovery Act is unconstitutional and permanently enjoined its enforcement.[1] The Recovery Act, enacted in June 2014, created a bankruptcy-like regime through which select Puerto Rican public corporations could restructure their debt obligations without unanimous creditor consent. Like the district court, the First Circuit concluded that the Recovery Act was preempted in its entirety by Section 903(1) of the U.S. Bankruptcy Code, which prohibits "states" (including Puerto Rico) from enacting laws that bind nonconsenting creditors to the terms of a debt restructuring. Unlike the district court, the First Circuit did not address whether the law violated the Constitution's Contract Clause....