[Congressional Record Volume 168, Number 12 (Wednesday, January 19, 2022)]
[House]
[Pages H230-H232]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PUERTO RICO RECOVERY ACCURACY IN DISCLOSURES ACT OF 2021
Ms. DEAN. Mr. Speaker, I move to suspend the rules and concur in the
Senate amendment to the bill (H.R. 1192) 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'').
The Clerk read the title of the bill.
The text of the Senate amendment is as follows:
Senate amendment:
Strike out all after the enacting clause and insert:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Puerto Rico Recovery
Accuracy in Disclosures Act of 2021'' or ``PRRADA''.
SEC. 2. DISCLOSURE BY PROFESSIONAL PERSONS SEEKING APPROVAL
OF COMPENSATION UNDER SECTION 316 OR 317 OF
PROMESA.
(a) Definitions.--In this section:
(1) List of material interested parties.--The term ``List
of Material Interested Parties'' means the List of Material
Interested Parties established under subsection (c)(1).
(2) Oversight board.--The term ``Oversight Board'' has the
meaning given the term in section 5 of PROMESA (48 U.S.C.
2104).
(b) Required Disclosure.--
(1) In general.--In a case commenced under section 304 of
PROMESA (48 U.S.C. 2164), no attorney, accountant, appraiser,
auctioneer, agent, 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 filed with the
court 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 any entity or person on the List of
Material Interested Parties.
(2) Supplement.--A professional person that submits a
statement under paragraph (1) shall promptly supplement the
statement with any additional relevant information that
becomes known to the person.
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(3) Disclosure.--Subject to any other applicable law, rule,
or regulation, a professional person that fails to file or
update a statement required under paragraph (1) or files a
statement that the court determines does not represent a good
faith effort to comply with this section shall disclose such
failure in any filing required to conform to the disclosure
requirements under rule 2014(a) of the Federal Rules of
Bankruptcy Procedure.
(c) List of Material Interested Parties.--
(1) Preparation.--Not later than 30 days after the date of
enactment of this Act, the Oversight Board shall establish a
List of Material Interested Parties subject to--
(A) the approval of the court; and
(B) the right of the United States trustee or any party in
interest to be heard on the approval.
(2) Inclusions.--Except as provided in paragraph (3), the
List of Material Interested Parties shall include--
(A) the debtor;
(B) any creditor;
(C) any other party in interest;
(D) any attorney or accountant of--
(i) the debtor;
(ii) any creditor; or
(iii) any other party in interest;
(E) the United States trustee and any person employed in
the office of the United States trustee; and
(F) the Oversight Board, including the members, the
Executive Director, and the employees of the Oversight Board.
(3) Exclusions.--The List of Material Interested Parties
may not include any person with a claim, the amount of which
is below a threshold dollar amount established by the court
that is consistent with the purpose of this Act.
(d) Review.--
(1) In general.--The United States trustee shall review
each verified statement submitted pursuant to subsection (b)
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
applications filed under section 316 or 317 of PROMESA (48
U.S.C. 2176, 2177) that fail to satisfy the requirements of
subsection (b).
(e) Limitation on Compensation.--In a 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) filed
after the date of enactment of this Act, the court may deny
allowance of compensation or reimbursement of expenses if--
(1) the professional person has failed to file the verified
disclosure statements required under subsection (b)(1) or has
filed inadequate disclosure statements under that subsection;
or
(2) during the professional person's employment in
connection with the case, the professional person--
(A) is not a disinterested person (as defined in section
101 of title 11, United States Code) relative to any entity
or person on the List of Material Interested Parties; or
(B) represents or holds an adverse interest in connection
with the case.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Pennsylvania (Ms. Dean) and the gentleman from Wisconsin (Mr.
Fitzgerald) each will control 20 minutes.
The Chair recognizes the gentlewoman from Pennsylvania.
General Leave
Ms. DEAN. Mr. Speaker, I ask unanimous consent that all Members have
5 legislative days to revise and extend their remarks and to include
extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Pennsylvania?
There was no objection.
Ms. DEAN. Mr. Speaker, I yield myself such time as I may consume.
H.R. 1192, the Puerto Rico Recovery Accuracy in Disclosures Act of
2021, or PRRADA, is commonsense legislation that would promote greater
transparency and integrity with respect to the ongoing financial
reorganization of Puerto Rico. This will be the third time in just over
2 years that the House will vote on this legislation, but, Mr. Speaker,
I think the third time will be the charm.
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 under certain
disclosures similar to those required under the Bankruptcy Code.
Additionally, the bill would require the United States Trustee to
review these disclosures and to submit comments in response to the
court, and it also authorizes the United States Trustee to object to
compensation requested by professionals.
And finally, H.R. 1192 would allow courts to deny 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. Common sense.
The House passed H.R. 1192 last February, and the Senate passed an
amended version of the Act last December. The Senate amendments
streamlined PRRADA's reporting requirements, strengthened the
incentives for good faith compliance, and clarify other provisions of
the Act.
Now, Puerto Rico's restructuring is drawing to a close, which makes
passage of this legislation especially urgent.
I thank Representative 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.
I urge my colleagues to support this bill, which was passed out of
the House last year and the year before by unanimous votes, and I
reserve the balance of my time.
Mr. FITZGERALD. Mr. Speaker, I yield myself such time as I may
consume.
I rise today in support of the Senate amendment to H.R. 1192, the
Puerto Rico Recovery Accuracy in Disclosures Act of 2021.
In 2016, Puerto Rico was experiencing severe financial pressure from
significant debt and related obligations.
In response to Puerto Rico's financial distress, Congress enacted the
Puerto Rico Oversight, Management, and Economic Stability Act of 2016.
That 2016 law created a bankruptcy process for Puerto Rico.
Like existing bankruptcy law in 2016, the law permitted certain
professionals working on Puerto Rico's bankruptcy, like lawyers and
accountants, to apply to get paid for their services pending judicial
approval.
But the 2016 law lacked certain disclosure requirements for these
professionals that would typically apply to restructuring professionals
in other bankruptcy cases.
The gap in the 2016 law created the potential for undisclosed
conflicts of interest for professionals involved in Puerto Rico's
bankruptcy.
This bill fills the gap by mandating the necessary disclosure
requirements. The bill also establishes a process for overseeing and
policing disclosures that bankruptcy professionals make.
H.R. 1192 passed the House unanimously in February of 2021. In
December, the Senate passed H.R. 1192 with a few minor amendments to
improve the bill's administrative abilities. The amendments also
enhanced the incentives for professionals to make significant efforts
to comply with the new disclosure requirements.
H.R. 1192 will serve important goals and interests, including the
interests of creditors and taxpayers and Puerto Rico itself.
Mr. Speaker, I encourage my colleagues to support this bill, and I
reserve the balance of my time.
Ms. DEAN. Mr. Speaker, I reserve the balance of my time.
Mr. FITZGERALD. Mr. Speaker, I yield 5 minutes to the gentlewoman
from Puerto Rico (Miss Gonzalez-Colon).
Miss GONZALEZ-COLON. Mr. Speaker, I rise in support of the approval
in the House of the Senate amendment to H.R. 1192, the Puerto Rico
Recovery Accuracy in Disclosures Act of 2021.
I joined Representative Velazquez to promote this bipartisan and
commonsense bill to help ensure the restructuring process under PROMESA
serves Puerto Rico's interests. Actually, just
[[Page H232]]
this week, the plan was approved by the Federal Court, so this is
perfect timing to approve this bill today.
Though it required some technical corrections, it is satisfying to
see this bill has already achieved passage in both Chambers. I wish for
my colleague, Congresswoman Velazquez, to be fully recovered in time to
see it become law.
The intent of this legislation remains the same, and this bill will
require any person or firm hired as legal, financial or technical staff
or consultants for the Financial Oversight Board in the court cases for
the restructuring of Puerto Rico's debt, to submit verified disclosures
of all connections with debtors, creditors, or other interested parties
in the process, before being compensated.
Our intention is not to exclude people with experience in Puerto
Rico's financial transactions from being resources in the restructuring
process, but it is essential that their connection to any parties
interested in those transactions be known. Conflict of interest, or the
appearance of conflict of interest, can be best avoided if there is
accountability and transparency.
Anyone working to inform the Board's decisions, or representing it
before the court, needs to be committed to defending the interests of
the people of Puerto Rico first, in accordance with the law and
justice.
Lack of transparency creates a lack of trust, and this bill will work
toward avoiding that by making these disclosures a legal mandate rather
than the Board's own discretion.
Our goal is to reach the day we no longer need the provisions of
PROMESA and the Oversight Board, but until that happens, these
instruments must be accountable and transparent.
I ask my colleagues to support the passage of the Senate amendment to
H.R. 1192, the Puerto Rico Recovery Accuracy in Disclosures Act of
2021.
{time} 1230
Ms. DEAN. Mr. Speaker, I am prepared to close, and I reserve the
balance of my time.
Mr. FITZGERALD. Mr. Speaker, I just reiterate that I think there is a
lot of support in the Chamber, and I support it as well.
Mr. Speaker, I yield back the balance of my time.
Ms. DEAN. Mr. Speaker, in closing, H.R. 1192 closes a loophole under
current law by establishing disclosure requirements regarding actual or
potential conflicts of interest in the bankruptcy process under
PROMESA. In doing so, this legislation promotes transparency and
accountability in the Puerto Rico restructuring process.
I thank my colleague, Representative Velazquez from New York, the
author of the bill, for her leadership on this issue, and I strongly
urge my colleagues to support this commonsense measure.
Mr. Speaker, I yield back the balance of my time.
Ms. VELAZQUEZ. Mr. Speaker, I rise in strong support of the Senate
Amendment to H.R. 1192, the Puerto Rico Recovery Accuracy in
Disclosures Act of 2021. I was proud to introduce this bill with
bipartisan support in the House. I would like to thank House Speaker
Nancy Pelosi and Chairman Jerry Nadler for bringing this legislation to
the floor and to Senator Bob Menendez for introducing a companion bill
in the Senate and for his tireless efforts to make sure this Bill would
get approved in the Senate.
H.R. 1192 already unanimously passed this House back on February 24,
2021 and I expect to do so the same today.
The Puerto Rico Recovery Accuracy in Disclosures Act of 2021 or
``PRRADA'' eliminates a double standard currently facing Puerto Rico.
Under U.S. Code and Federal Bankruptcy procedure, any conflicts of
interest--or even the perception of such conflict--between those
working on the bankruptcy and the debtor are required to be disclosed.
However, a loophole in the current law prevents this requirement from
being extended to the people of Puerto Rico.
In 2016, Congress passed the Puerto Rico Oversight, Management, and
Economic Stability Act, otherwise known as PROMESA. When PROMESA was
originally passed, it incorporated Chapter 11's bankruptcy requirement
that professionals file fee applications with the court. But PROMESA
did not include Chapter 11's disclosure requirements that go hand-in-
hand with those fee applications. PRRADA remedies this and makes sure
that professionals paid by the taxpayers of Puerto Rico are fully
transparent about what interests they are serving.
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 self-interest. This bipartisan bill ensures
integrity and transparency of the PROMESA process.
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.
Once more, I would like to thank Chairman Nadler, the Committee Staff
and the bipartisan cosponsors of this bill. I strongly encourage all
members to vote ``Yes'' on this critical piece of legislation.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from Pennsylvania (Ms. Dean) that the House suspend the
rules and concur in the Senate amendment to the bill, H.R. 1192.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the Senate amendment was concurred in.
A motion to reconsider was laid on the table.
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