Puerto Rico Recovery Accuracy in Disclosures Act of 2021
Floor Speech
BREAK IN TRANSCRIPT
Ms. DEAN. Mr. Speaker, I move to suspend the rules and concur in the Senate amendment to the bill (H.R. 1192) to impose requirements on the payment of compensation to professional persons employed in voluntary cases commenced under title III of the Puerto Rico Oversight Management and Economic Stability Act (commonly known as ``PROMESA'').
The Clerk read the title of the bill.
The text of the Senate amendment is as follows:
Senate amendment:
Strike out all after the enacting clause and insert: SECTION 1. SHORT TITLE.
This Act may be cited as the ``Puerto Rico Recovery Accuracy in Disclosures Act of 2021'' or ``PRRADA''. SEC. 2. DISCLOSURE BY PROFESSIONAL PERSONS SEEKING APPROVAL OF COMPENSATION UNDER SECTION 316 OR 317 OF PROMESA.
(a) Definitions.--In this section:
(1) List of material interested parties.--The term ``List of Material Interested Parties'' means the List of Material Interested Parties established under subsection (c)(1).
(2) Oversight board.--The term ``Oversight Board'' has the meaning given the term in section 5 of PROMESA (48 U.S.C. 2104).
(b) Required Disclosure.--
(1) In general.--In a case commenced under section 304 of PROMESA (48 U.S.C. 2164), no attorney, accountant, appraiser, auctioneer, agent, or other professional person may be compensated under section 316 or 317 of that Act (48 U.S.C. 2176, 2177) unless prior to making a request for compensation, the professional person has filed with the court a verified statement conforming to the disclosure requirements of rule 2014(a) of the Federal Rules of Bankruptcy Procedure setting forth the connection of the professional person with any entity or person on the List of Material Interested Parties.
(2) Supplement.--A professional person that submits a statement under paragraph (1) shall promptly supplement the statement with any additional relevant information that becomes known to the person.
(3) Disclosure.--Subject to any other applicable law, rule, or regulation, a professional person that fails to file or update a statement required under paragraph (1) or files a statement that the court determines does not represent a good faith effort to comply with this section shall disclose such failure in any filing required to conform to the disclosure requirements under rule 2014(a) of the Federal Rules of Bankruptcy Procedure.
(c) List of Material Interested Parties.--
(1) Preparation.--Not later than 30 days after the date of enactment of this Act, the Oversight Board shall establish a List of Material Interested Parties subject to--
(A) the approval of the court; and
(B) the right of the United States trustee or any party in interest to be heard on the approval.
(2) Inclusions.--Except as provided in paragraph (3), the List of Material Interested Parties shall include--
(A) the debtor;
(B) any creditor;
(C) any other party in interest;
(D) any attorney or accountant of--
(i) the debtor;
(ii) any creditor; or
(iii) any other party in interest;
(E) the United States trustee and any person employed in the office of the United States trustee; and
(F) the Oversight Board, including the members, the Executive Director, and the employees of the Oversight Board.
(3) Exclusions.--The List of Material Interested Parties may not include any person with a claim, the amount of which is below a threshold dollar amount established by the court that is consistent with the purpose of this Act.
(d) Review.--
(1) In general.--The United States trustee shall review each verified statement submitted pursuant to subsection (b) and may file with the court comments on such verified statements before the professionals filing such statements seek compensation under section 316 or 317 of PROMESA (48 U.S.C. 2176, 2177).
(2) Objection.--The United States trustee may object to applications filed under section 316 or 317 of PROMESA (48 U.S.C. 2176, 2177) that fail to satisfy the requirements of subsection (b).
(e) Limitation on Compensation.--In a case commenced under section 304 of PROMESA (48 U.S.C. 2164), in connection with the review and approval of professional compensation under section 316 or 317 of PROMESA (48 U.S.C. 2176, 2177) filed after the date of enactment of this Act, the court may deny allowance of compensation or reimbursement of expenses if--
(1) the professional person has failed to file the verified disclosure statements required under subsection (b)(1) or has filed inadequate disclosure statements under that subsection; or
(2) during the professional person's employment in connection with the case, the professional person--
(A) is not a disinterested person (as defined in section 101 of title 11, United States Code) relative to any entity or person on the List of Material Interested Parties; or
(B) represents or holds an adverse interest in connection with the case.
H.R. 1192, the Puerto Rico Recovery Accuracy in Disclosures Act of 2021, or PRRADA, is commonsense legislation that would promote greater transparency and integrity with respect to the ongoing financial reorganization of Puerto Rico. This will be the third time in just over 2 years that the House will vote on this legislation, but, Mr. Speaker, I think the third time will be the charm.
In response to dire fiscal issues facing Puerto Rico at the time, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act, or PROMESA, in 2016.
That legislation established the Financial Oversight and Management Board with control over Puerto Rico's budget, laws, financial plans, and regulations, and the authority to retain professionals to assist the Board in executing its responsibilities.
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.
Importantly, this includes the code's mandatory disclosure requirements regarding actual or potential conflicts of interest that professional persons seeking to be retained in a bankruptcy case must make to the court prior to their retention.
This bill would close that loophole by conditioning the compensation of professional persons retained under PROMESA under certain disclosures similar to those required under the Bankruptcy Code.
Additionally, the bill would require the United States Trustee to review these disclosures and to submit comments in response to the court, and it also authorizes the United States Trustee to object to compensation requested by professionals.
And finally, H.R. 1192 would allow courts to deny compensation for services and reimbursement of expenses 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. Common sense.
The House passed H.R. 1192 last February, and the Senate passed an amended version of the Act last December. The Senate amendments streamlined PRRADA's reporting requirements, strengthened the incentives for good faith compliance, and clarify other provisions of the Act.
Now, Puerto Rico's restructuring is drawing to a close, which makes passage of this legislation especially urgent.
I thank Representative Velazquez for her leadership in championing this bill and for her relentless dedication to ensuring that the people of Puerto Rico receive the fair, efficient, and transparent restructuring process they deserve.
I urge my colleagues to support this bill, which was passed out of the House last year and the year before by unanimous votes, and I reserve the balance of my time.
BREAK IN TRANSCRIPT
Ms. DEAN. Mr. Speaker, I am prepared to close, and I reserve the balance of my time.
BREAK IN TRANSCRIPT
Ms. DEAN. Mr. Speaker, in closing, H.R. 1192 closes a loophole under current law by establishing disclosure requirements regarding actual or potential conflicts of interest in the bankruptcy process under PROMESA. In doing so, this legislation promotes transparency and accountability in the Puerto Rico restructuring process.
I thank my colleague, Representative Velazquez from New York, the author of the bill, for her leadership on this issue, and I strongly urge my colleagues to support this commonsense measure.
BREAK IN TRANSCRIPT
Source