Puerto Rico Recovery Accuracy in Disclosures Act of 2020

Floor Speech

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Ms. VELAZQUEZ. Mr. Speaker, I rise in strong support of H.R. 683, The Puerto Rico Recovery Accuracy in Disclosures Act of 2619. I am thankful for my friends, Chairman Jerrold Nadler, the Members serving on the Judiciary committee, and the staff who helped bring this bipartisan bill to the floor.

Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act--or PROMESA--in 2016 to set up an orderly bankruptcy process to restructure its debt, stimulate economic development, and put the Island on a path to financial recovery.

The bill before the House's consideration today, will close a loophole in the Island's debt restructuring process, improve transparency, and restore confidence in the island's future.

While we can have differing opinions on how effectively the Oversight Board is carrying out its mission, one thing should be clear--the island's residents should be entitled to the same rights and protections as any debtor on the mainland.

The trust the American people have placed in our bankruptcy resolution system is based on a fair, efficient, and transparent process. Transparency, as required by section 327 of Title 11 of the United States Code and Rule 2014 of Federal Bankruptcy procedure, applies to every corporate bankruptcy and ensures any conflicts of interest--or even the perception of such conflict--between those working on the bankruptcy and the debtor are disclosed. However, PROMESA does not have a similar requirement.

The bill we are bringing to the floor today addresses this oversight and applies a robust disclosure requirement to all PROMESA Title III proceedings, eliminating the double standard that the People of Puerto Rico. Puerto Ricans should be confident that the Board's bankruptcy advisors do not have their ``thumb on the scale'' to favor certain debts where they have a selfinterest. This bipartisan bill ensures integrity of the PROMESA process.

The need for PRRADA was articulated in February 2019, when a board- appointed law firm investigated potential conflicts in Puerto Rico's bankruptcy in response to reports by the press about conflicts of interests by one of the Board's consultants. One of the main recommendations in the ``Luskin Report'' was that vendors should disclose affiliate relationships. The report found that trading in Puerto Rico public debt is particularly problematic, as it gives rise to the appearance of conflict. This is exactly what PRRADA would require vendors to do--and why we need to pass this comprehensive piece of legislation.

In closing, PRRADA will guarantee to the people of Puerto Rico the same transparency and disclosure practices required by law in U.S. mainland bankruptcies. Tn the interest of fairness for Puerto Rico's people and for impartiality in restructuring--and thereby securing-- Puerto Rico's future, we must pass H.R. 683 and close this loophole.

Once more, I would like to thank Chairman Nadler, the staff and the bipartisan cosponsors of this bill. I strongly encourage all members to vote ``Yes'' on this critical piece of legislation.

Ms. JACKSON LEE. Mr. Speaker, as a senior member of the Judiciary, Committee, I rise in strong support of H.R. 683, the ``Puerto Rico Recovery Accuracy in Disclosures Act of 2019'' or ``PRRADA Act,'' which conditions compensation of professional persons retained under the congressionally passed ``Puerto Rico Oversight, Management, and Economic Stability Act'' (``PROMESA'') upon the applicant providing certain disclosures similar to those required under Bankruptcy Code section 327.

In response to dire fiscal issues facing Puerto Rico at the time, Congress passed Pub. L. 114-187, the ``Puerto Rico Oversight, Management, and Economic Stability Act'' or ``PROMESA'' in 2016, legislation I strongly supported and cosponsored.

The Act established the Financial Oversight and Management Board (Board), a fiscal control board comprised of seven members that would have control over Puerto Rico's budget, laws, financial plans, and regulations.

It empowered the board to propose a budget for Puerto Rico and restructure its obligations owed to bondholders, estimated to be $6.5 billion, and other creditors.

Although largely patterned on chapter 11 of the Bankruptcy Code, PROMESA did not incorporate all facets of chapter 11 and other relevant provisions of the Code. For example, although the Board is authorized to retain and compensate professional persons in connection with its efforts to reorganize Puerto Rico, PROMESA does not include certain restrictions that the Bankruptcy Code requires for such purposes.

For example, Section 327 of the Bankruptcy Code, unlike PROMESA, authorizes professional persons, such as attorneys, financial advisors, appraisers, and others, to be retained in connection with the administration of a bankruptcy case provided they meet the following conditions: first, such a person must not hold or represent an interest adverse to the bankruptcy estate; and second, the professional must be a ``disinterested person.''

As I indicated at the outset, H.R. 683, the ``Puerto Rico Recovery Accuracy in Disclosures Act of 2019'' or ``PRRADA,'' conditions compensation of professional persons retained under PROMESA upon the applicant providing certain disclosures similar to those required under Bankruptcy Code section 327.

In addition, it would require the United States Trustee to review such I disclosures and submit comments in response to the court as well as authorize the United States trustee to object to compensation requested by professionals. Further, the measure would apply retroactively to professionals who have previously been awarded compensation.

Finally, H.R. 683 would authorize the court to deny allowance of compensation for services and reimbursement of expenses accruing after the bill's enactment date if the professional person did not comply with the disclosure requirement, was not a disinterested person, or represented or held an interest adverse to the bankruptcy estate.

I urge all Members to join me in voting for H.R. 683, the ``Puerto Rico Recovery Accuracy in Disclosures Act of 2019.''

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