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Velazquez Seeks to End Conflicts of Interest in PROMESA Debt Restructuring in Puerto Rico

Velázquez Seeks to End Conflicts of Interest in PROMESA Debt Restructuring in Puerto Rico
February 23, 2021
Press Release

Washington, DC - Rep. Nydia M. Velázquez (D-NY) has introduced the “Puerto Rico Recovery Accuracy in Disclosures Act of 2021.” Known as PRRADA, the bill would extend current U.S. law to require disclosures of conflicts of interest in all PROMESA bankruptcy proceedings in Puerto Rico, and thereby improve transparency and restore confidence in the island’s future. Senator Bob Menendez (D-NJ) has introduced a companion bill in the U.S. Senate.
“The people of Puerto Rico deserve to know that those credited with restructuring the debt have their best interests at heart—not personal financial stakes,” said Velázquez. “This commonsense bill closes a loophole to require the disclosure of any conflicts of interest between those working on the bankruptcy and the debtor. To put the Island on the path to a brighter future we must weed out corruption and self-interest by strengthening oversight which is exactly why I’ve introduced this bill.”
“I opposed PROMESA because I did not believe it did enough to protect the people of Puerto Rico in restructuring its debt, and now we are facing but one of the consequences of the bill—failing to hold the Board’s advisers and consultants to the same transparency standards required on the mainland,” said Sen. Menendez. “Our bipartisan and bicameral legislation will close the current loophole in the law, establishing robust disclosure requirements for bankruptcy advisors and consultants that will serve to protect the interests of working families in Puerto Rico. We cannot afford to wait any longer in getting this done.”
Velázquez’s bill requires attorneys, accountants, consultants, and other professional persons employed by the Oversight Board in a Title III case to submit verified disclosures of their connections with the debtor, creditors, or persons employed by the Oversight Board, prior to being compensated under PROMESA. The disclosures must comport to existing bankruptcy rules and include information on the identity of each entity or person with whom such professional person has a connection. 
Under the bill, the U.S. Trustee would also review the disclosures submitted and potentially file comments with the Court should the disclosures not be properly submitted, potentially preventing compensation from a firm that is in violation. The new disclosure requirements would apply retroactively to individuals and companies already employed by the Oversight Board. 
Velázquez’s bill has been cosponsored by: Andy Biggs (R-AZ); Pramila Jayapal (D-WA); Raul M. Grijalva (D-AZ); David Cicilline (D-RI); Jamie Raskin (D-MD); Jenniffer Gonzalez (R-PR).

The text of the bill can be found here.