Puerto Rico government officials sought Thursday to convince U.S. legislators that the island's financially struggling public corporations should be allowed to restructure their debt under the federal bankruptcy code.

The push comes weeks after a federal judge ruled that a local debt-restructuring law that Puerto Rico's governor approved last year was unconstitutional.

Melba Acosta, president of Puerto Rico's Government Development Bank, was among those who testified before a U.S. House Judiciary Committee hearing in Washington, D.C.

"The fiscal and economic situation in Puerto Rico has reached a critical moment," she said. "If the public corporations default on their obligations and there is no clear legal regime, creditors may attempt to engage in a race to the courthouse."

Puerto Rico Resident Commissioner Pedro Pierluisi has filed a bill seeking to allow the island's state-owned corporations to file for Chapter 9 if needed. It would not apply to debt issued directly by Puerto Rico's government.

The U.S. territory is in its eighth year of recession and is struggling to reduce $73 billion in public debt, with public corporations holding nearly 40 percent of that amount. Investors have grown increasingly concerned that the island's Electric Energy Authority, which holds about $9 million in debt, could be one of the first to possibly go bankrupt.

Moody's Investors Service said in a report last week that Puerto Rico might default on its debt in the next two years.

The island issued a record $3.5 billion in bonds last year to help generate more revenue, and it expects to soon issue $2 billion more, backed by a proposed excise tax increase on crude oil. The revenue would help strengthen the finances of the Highway and Transportation Authority, which owes $2.2 billion to Puerto Rico's Government Development Bank, about 21 percent of the bank's portfolio.

Acosta said that if the bill is not approved, it would make it more expensive for the government to borrow money and make it harder for public corporations to become self-sufficient.

Puerto Rico is currently the third-largest issuer of municipal bonds in the United States.

Critics say the bill would affect $48 billion worth of Puerto Rico municipal bonds and hurt bondholders.

"Puerto Rican law already provides an alternative: receivership," said Thomas Mayer, who represents funds managed by Franklin Municipal Bond Group and OppenheimerFunds, Inc.

The two companies filed a lawsuit that led a federal judge to strike down the island's debt-restructuring law this month.