[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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