[Congressional Record Volume 166, Number 207 (Tuesday, December 8, 2020)]
[House]
[Pages H7009-H7011]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PUERTO RICO RECOVERY ACCURACY IN DISCLOSURES ACT OF 2020
Mr. CICILLINE. Mr. Speaker, I move to suspend the rules and pass the
bill (H.R. 683) 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''), as amended.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 683
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Puerto Rico Recovery
Accuracy in Disclosures Act of 2020'' or ``PRRADA''.
SEC. 2. DISCLOSURE BY PROFESSIONAL PERSONS SEEKING APPROVAL
OF COMPENSATION UNDER SECTION 316 OR 317 OF
PROMESA.
(a) Required Disclosure.--
(1) In general.--In a voluntary case commenced under
section 304 of PROMESA (48 U.S.C. 2164), no attorney,
accountant, appraiser, auctioneer, agent, consultant, 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 submitted 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--
(A) the debtor;
(B) any creditor;
(C) any other party in interest, including any attorney or
accountant;
(D) the Financial Oversight and Management Board
established in accordance with section 101 of PROMESA (48
U.S.C. 2121); and
(E) any person employed by the Oversight Board described in
subparagraph (D).
(2) Other requirements.--A professional person that submits
a statement under paragraph (1) shall--
(A) supplement the statement with any additional relevant
information that becomes known to the person; and
(B) file annually a notice confirming the accuracy of the
statement.
(b) Review.--
(1) In general.--The United States Trustee shall review
each verified statement submitted pursuant to subsection (a)
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
compensation applications filed under section 316 or 317 of
PROMESA (48 U.S.C. 2176, 2177) that fail to satisfy the
requirements of subsection (e).
(3) Right to be heard.--Each person described in section
1109 of title 11, United States Code, may appear and be heard
on any issue in a case under this section.
(c) Jurisdiction.--The district courts of the United States
shall have jurisdiction of all cases under this section.
(d) Retroactivity.--
(1) In general.--If a court has entered an order approving
compensation under a case commenced under section 304 of
PROMESA (48 U.S.C. 2164), each professional person subject to
the order shall file a verified statement in accordance with
subsection (a) not later than 60 days after the date of
enactment of this Act.
(2) No delay.--A court may not delay any proceeding in
connection with a case commenced under section 304 of PROMESA
(48 U.S.C. 2164) pending the filing of a verified statement
under paragraph (1).
(e) Limitation on Compensation.--
(1) In general.--In a voluntary 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), the
court may deny allowance of compensation for services and
reimbursement of expenses, accruing after the date of the
enactment of this Act of a professional person if the
professional person--
(A) has failed to file statements of connections required
by subsection (a) or has filed inadequate statements of
connections;
(B) except as provided in paragraph (3), is on or after the
date of enactment of this Act not a disinterested person, as
defined in section 101 of title 11, United States Code; or
(C) except as provided in paragraph (3), represents, or
holds an interest adverse to, the interest of the estate with
respect to the matter on which such professional person is
employed.
(2) Considerations.--In making a determination under
paragraph (1), the court may take into consideration whether
the services and expenses are in the best interests of
creditors and the estate.
(3) Committee professional standards.--An attorney or
accountant described in section 1103(b) of title 11, United
States Code, shall be deemed to have violated paragraph (1)
if the attorney or accountant violates section 1103(b) of
title 11, United States Code.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Rhode Island (Mr. Cicilline) and the gentleman from North Dakota (Mr.
Armstrong) each will control 20 minutes.
The Chair recognizes the gentleman from Rhode Island.
General Leave
Mr. CICILLINE. Mr. Speaker, I ask unanimous consent that all Members
have 5 legislative days to revise and extend their remarks and include
extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Rhode Island?
There was no objection.
Mr. CICILLINE. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, H.R. 683, the Puerto Rico Recovery Accuracy in
Disclosures Act, or PRRADA, is bipartisan legislation that would
promote greater transparency and integrity with respect to
[[Page H7010]]
the ongoing financial reorganization of Puerto Rico.
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 upon certain disclosures
similar to those required under the Bankruptcy Code.
Additionally, the bill would require the United States trustee to
review these disclosures and submit comments in response to the Court,
and also authorizes the United States trustee to object to compensation
requested by professionals.
And finally, H.R. 683 would allow courts to deny the 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.
I thank Chairwoman 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.
Mr. Speaker, I urge my colleagues to support this bill, which was
favorably reported out of the Judiciary Committee by unanimous vote,
and I reserve the balance of my time.
Mr. ARMSTRONG. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, in 2016, Puerto Rico faced serious and increasing
financial pressure brought on by significant debt and related
obligations.
In response to that financial crisis, Congress passed the Puerto Rico
Oversight, Management, and Economic Stability Act of 2016.
This 2016 law set up a bankruptcy mechanism for Puerto Rico to
address its obligations.
Like other existing bankruptcy laws, the 2016 law enables bankruptcy
professionals, such as lawyers and consultants, to apply for payment
for their services subject to court approval.
But the 2016 law lacked certain disclosure requirements for
professionals, even though these requirements apply to professionals in
any other bankruptcy case.
That gap in the law created the potential for unaddressed conflicts
of interest for professionals involved in Puerto Rico's bankruptcy
process.
To address this concern, H.R. 683 establishes disclosure requirements
for accountants, lawyers, and other bankruptcy professionals working on
matters related to Puerto Rico's bankruptcy.
The additional disclosure requirements in H.R. 683 increase the
likelihood that any conflicts of interest will be caught and timely
addressed before compensation decisions are made.
Taken as a whole, this added level of transparency will benefit
important interests, such as those of the creditors and taxpayers and
ultimately of Puerto Rico itself.
Mr. Speaker, I encourage my colleagues to support this bill, and I
reserve the balance of my time.
Mr. CICILLINE. Mr. Speaker, I reserve the balance of my time.
Mr. ARMSTRONG. Mr. Speaker, I yield 4 minutes to the gentlewoman from
Puerto Rico (Miss Gonzalez-Colon.)
Miss GONZALEZ-COLON of Puerto Rico. Mr. Speaker, I rise in support of
H.R. 683, the Puerto Rico Recovery Accuracy in Disclosures Act.
Representative Velazquez and myself have proposed this initiative
since the last Congress, and I am thankful that on this occasion we
have been able to count on the original cosponsorship of Chairman
Grijalva and Ranking Member Bishop, as well as many other cosponsors,
both Republicans and Democrats.
This bill is an important component in ensuring that the
restructuring process under PROMESA looks out for Puerto Rico's best
interests.
This legislation requires any counsel and professional personnel that
the Financial Oversight and Management Board may hire to work on a
title III case for the restructuring of Puerto Rico's debt, to submit
verified disclosures of their connections with the debtor, creditors,
or persons employed by the board prior to being compensated.
This provision will impose on the decisions about the hiring of
personnel for the restructuring the same requirements as are imposed on
such personnel under the existing bankruptcy rules.
Our intention is not to exclude anyone's expertise and knowledge of
Puerto Rico's fiscal transactions from being resources in the
restructuring process. But I think it is essential that any such
connection be clear and known, so that such persons' qualifications and
the role they are going to play can be better evaluated. And that has
happened in the past. So I think the result of this legislation will
clarify that and will not allow that to happen again. Conflicts of
interest or the appearance of conflicts of interest can be best avoided
if there is accountability and transparency.
This bill would require that such personnel must disclose in detail
their participation and involvement with any entity involved in the
issuance of Puerto Rico debt and in any claims involving Puerto Rico's
debt, informing the identity of each.
Anyone who is serving on the board or working to inform its
decisions--and I may say the President today announced three more new
members to the Oversight Board, so I think the time of approving this
bill is just accurate--or representing it before the title III court,
must have the trust of all parties that they are committed to defending
the interests of the people of Puerto Rico to the best of their ability
in accordance with the law and justice.
A lack of transparency in these personnel decisions creates a lack of
confidence and distrust. Learning that someone used to be involved in
the businesses of one of the parties in the case only after they are
named and working on that case does not create an assurance of their
commitment to the best interests of Puerto Rico or the managing of
their debt.
That is the reason everyone's ultimate goal must be to reach out and
reach the day that we no longer need the provisions of PROMESA or the
Fiscal Oversight Board in Puerto Rico, and we can dedicate ourselves to
rebuild and grow our economy.
Until that happens, we must demand that the instruments created by
PROMESA be accountable and transparent in their processes. Nothing less
should be acceptable, and that is the reason I call upon my colleagues
to pass H.R. 683.
Mr. ARMSTRONG. Mr. Speaker, I couldn't have said it any better, and I
yield back the balance of my time.
Mr. CICILLINE. Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, H.R. 683 closes a loophole under current law by
establishing disclosure requirements regarding actual or potential
conflicts of interest in the Bankruptcy Code process under PROMESA. In
doing so this legislation promotes transparency and accountability in
the Puerto Rico restructuring process.
I, again, thank my colleague, the gentlewoman from New York (Ms.
Velazquez), the author of this bill, for her leadership on this issue,
and I strongly urge my colleagues to support this commonsense measure.
Before closing, since this will likely be the final bill within this
subcommittee's jurisdiction considered on the floor of this Congress, I
want to take a moment to recognize the outstanding career of the
ranking member of the subcommittee and my friend, Congressman Jim
Sensenbrenner.
As part of his distinguished career, he has left an indelible mark on
the Judiciary Committee, on Congress, and on our country.
[[Page H7011]]
We recently celebrated those contributions in a ceremony held by the
committee.
Congressman Sensenbrenner has never hesitated to work across party
lines in service of hardworking Americans. As the incoming chairman of
the subcommittee, I looked to him for leadership in the beginning of
the Congress. Since then, he has been a tremendous source of advice and
wisdom over the past 2 years.
It has been a real pleasure working with him this Congress, and I
thank him for his incredible service and wish him well in his
retirement.
Mr. Speaker, I yield back the balance of my time.
{time} 1645
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.''
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Rhode Island (Mr. Cicilline) that the House suspend the
rules and pass the bill, H.R. 683, as amended.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill, as amended, was passed.
A motion to reconsider was laid on the table.
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