By Nick Timiraos 

A House committee advanced legislation to address Puerto Rico's debt crisis with solid bipartisan support, a strong sign the bill could now advance quickly through Congress ahead of a potential default by the territory on July 1.

The legislation would create a debt-restructuring process and empower a federal oversight board to supervise what is shaping up to be the largest municipal debt workout in American history. It wouldn't spend any federal money.

The House Committee on Natural Resources, which has oversight of federal territories, advanced the bill on a 29-10 vote. The bill, which produced a rare moment of bipartisan cooperation in an election year, has drawn strong opposition from some bondholders and other political groups that spent millions of dollars on television advertisements to defeat it.

Puerto Rico has begun defaulting on several classes of nearly $70 billion in debt it owes, threatening to worsen the island's growth prospects after a decadelong recession. Because it isn't a state, its municipalities aren't eligible to restructure their debts in U.S. bankruptcy courts, and because it isn't a country, Puerto Rico can't turn to the International Monetary Fund for assistance.

Rep. Rob Bishop (R., Utah), the committee chair, said he expects majorities of both parties to back the bill when it comes to the House floor. Senate Republicans have indicated that it will advance quickly in that chamber. "We're anxious to take up whatever they can pass," said Senate Majority Leader Mitch McConnell (R., Ky.) on Tuesday.

The White House supports the measure.

The bill would be a significant policy accomplishment for House Speaker Paul Ryan (R., Wis.), who tasked Mr. Bishop with crafting legislation earlier this year to create a pathway for the island to write down certain debts while subject to the federal board. They worked closely with the Treasury Department and Democratic lawmakers to refine legislation both sides said was an unusually collegial and bipartisan process.

Some conservative lawmakers objected to the bill because they said it would harm creditors' rights and create a potential precedent for distressed U.S. states. Labor unions, some progressives, and Puerto Rican officials have objected to other provisions. They say the oversight board amounts to a colonial takeover.

House Minority Leader Nancy Pelosi (D., Calif.) and Rep. Pedro Pierluisi, a Democrat who serves as Puerto Rico's nonvoting representative, have supported the bill, saying it is the best package they can secure under a Republican-controlled Congress. Lawmakers should "get real" about any alternatives "that can actually become law," said Mr. Pierluisi. "I do not believe one exists."

Siobhan Hughes contributed to this article.

Write to Nick Timiraos at nick.timiraos@wsj.com

(END) Dow Jones Newswires

May 25, 2016 14:01 ET (18:01 GMT)