Fiscal board OKs POA while seeking to preempt local laws
By The Star Staff
The Financial Oversight and Management Board for Puerto Rico announced Thursday that it is willing to move forward with the confirmation process of the Plan of Adjustment (POA) to reduce the commonwealth’s central government debt by 80% and enable Puerto Rico to leave bankruptcy behind.
However, in the Title III Bankruptcy Court, the oversight board submitted a memo supporting the POA but seeking preemption on close to 100 local laws. One of the laws bans the government from cutting pensions while another, Act 42 of 2021, requires the commonwealth’s approval for the issuance of debt. That means that the oversight board, if the court approves its memo, could move forward with the POA even if the government objects. The oversight board and the government have been at odds over the contents of the POA, which contains an 8.5% cut to certain public pensions.
The oversight board, nonetheless, said in a statement that after carefully reviewing Act 53-2021, formerly House Bill 1003, that would enable the POA that was adopted by the Puerto Rico Legislature and signed by Gov. Pedro Pierluisi Urrutia on Tuesday, concluded that “the changes the Legislature made to the amended legislation following the [Monday,] October 25, 2021 hearing by the U.S. District Court for the District of Puerto Rico forms the basis for the issuance of new general obligation bonds that is part of the 7th Amended Plan of Adjustment.”
Therefore, the oversight board said, it is willing to move forward with the confirmation process without further mediation and with appropriate adjustments to the proposed confirmation order.
“The Oversight Board is grateful for the hearing ordered by Judge Laura Taylor Swain and the resulting adjustments to the legislation that made Act 53 acceptable to the Oversight Board, and for the opportunity of mediation under the guidance of the team led by Judge Barbara J. Houser,” it said.
“I am relieved and pleased that we are back on track and can move forward with the Plan of Adjustment to end Puerto Rico’s painful bankruptcy,” said the oversight board’s chairman, David Skeel. “This plan reduces Puerto Rico’s debt to sustainable levels and its confirmation will provide a foundation for sustainable economic growth.”