U.S. to Back Puerto Rico Law, Slowing Debt-Restructuring Bid (1)

The U.S. Department of Justice said on Friday that it will intervene in Puerto Rico’s four-year bankruptcy case to defend a federal law that gave the island the ability to cut its obligations through the courts.

The move, intended to stave off challenges that the bankruptcy is unconstitutional, may actually prolong the commonwealth’s efforts to restructure its $33 billion of debt and exit court oversight. The bankruptcy is the largest ever in the $4 trillion municipal-bond market.

While a majority of Puerto Rico’s creditors have endorsed the restructuring plan, an individual bondholder and two real estate companies allege that Promesa, ...