New law extends federal disclosure rules to PROMESA Title III proceedings
By The Star Staff
The Financial Oversight and Management Board on Thursday welcomed a new law that would provide more transparency in its dealings.
President Biden signed the Puerto Rico Recovery Accuracy in Disclosures Act (PRRADA), which extends the disclosure requirements of the Federal Rules of Bankruptcy Procedure to professionals employed by the oversight board, official committees, or debtors in proceedings under Title III of the Puerto Rico Oversight, Management and Economic Stability Act.
In July 2021, oversight board member Arthur J. González testified before the U.S. Senate Committee on Energy and Natural Resources in support of the legislation.
“The Oversight Board welcomes the legislation and fully supports the Law’s purpose to avoid conflicts of interest and to provide greater transparency through enhanced disclosure,” the board said.
The House sent the PRRADA to the president’s desk Wednesday after passing it by voice vote. The Senate passed the bill by unanimous consent in December after making amendments to the original House version.
In bankruptcy cases, lawyers, accountants and other advisers must file complete conflict disclosures in order to be paid by the bankruptcy estate.
The bill was authored by U.S. Sens. Bob Menéndez (D-N.J.) and Marco Rubio (R-Fla.), along with Rep. Nydia Velázquez (D-N.Y.).
“When Congress passed the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) in 2016, one of the many reasons I was vehemently opposed is because it included an unfair loophole that allowed bankruptcy advisers and consultants to get rich off of worsening economic inequalities in Puerto Rico without having to disclose their conflicts of interests with creditors to whom Puerto Rico owed money,” Menéndez said. “Today we took a monumental leap forward in righting this wrong. The people of Puerto Rico are now one step closer to finally having the transparency they deserve in the debt restructuring process.”
Rubio said “it is past time to close this loophole and ensure our fellow citizens living in Puerto Rico are benefitting from transparency requirements that are afforded to Americans living on the mainland.”