Expenses in Title III bankruptcy process approach $1 billion

Senate Treasury Committee Chairman Juan Zaragoza Gómez

By The Star Staff

While the cost of Puerto Rico’s Title III bankruptcy cases has gone up, salaries for public workers in Puerto Rico are going down.

Fee Examiner Brady Williamson presented Thursday the 11th interim compensation period (Oct. 1, 2020-Jan. 31, 2021) to the Title III bankruptcy court, bringing the fee review process into the cases’ fifth calendar year, and announced that expenses are close to reaching the one billion mark.

With the report, the fee examiner again recommended the approval of a group of interim fee applications and the deferral of a number of applications to Oct. 6, 2021 or a subsequent omnibus hearing date to allow for continued review and discussion of those applications with the professionals.”

“This report addresses compensation applications for the Eleventh Interim Compensation Period and prior interim fee periods,” Williamson said. “It recommends the Court’s approval of 28 negotiated adjusted, and uncontested applications for professional compensation pursuant to PROMESA [the Puerto Rico Oversight, Management and Economic Stability Act]. As of July 27, 2021, professionals have requested about $960 million in fees and expenses through the Title III compensation process.”

Williamson praised the positive developments in the proceedings over the past month in which debt deals have been reached to restructure commonwealth debt because, he said, they should reduce both controversy and, as a result, professional fees in the three months between now and the scheduled confirmation hearings, slated for November.

“This report also serves as a reminder that all professional fees and expenses remain subject to a final review and final approval, probably sometime in 2022,” and savings will not be seen immediately, he said.

While professional fees are going up, the Financial Oversight and Management Board rejected several bills that were being evaluated by Senate Treasury Committee Chairman Juan Zaragoza Gómez that called for salary raises for certain government workers.

The oversight board rejected Senate Bills (SB) 468, 469 and 470 after Zaragoza asked the entity for an evaluation.

The bills seek, among other things, to establish a base salary for certain public servants. SB 468 would establish a base salary for the internal revenue agents of the Treasury Department at $2,250 per month. SB 469 would establish a base salary for the special tax agents of the Treasury Department at $2,250.00 per month, and SB 470 would establish a base salary for the public service inspectors of the Bureau of Transportation and Public Service at $2,250 per month.

“The Oversight Board finds the bills, as proposed, are significantly inconsistent with the Fiscal Plan and the certified Budget because among other things, each of the Bills require the expenditure of funds not contemplated in the Fiscal Plan or the Certified Budget, without identifying a funding source to cover the additional costs of this increase; and, second, [each] Bill increases base salaries without first implementing the civil service reform process, as required by the Fiscal Plan, to understand true payroll requirements,” the oversight board said in a letter to Zaragoza.

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