The senior creditors of the Puerto Rico Sales Tax Financing Corporation, known as COFINA, said Wednesday the draft of the Puerto Rico Oversight, Management, and Economic Stability Act lays “the groundwork for a pragmatic, workable policy solution…aimed at addressing Puerto Rico’s economic crisis.”
The application in the draft legislation of the U.S. Constitution’s Territorial Clause and the bill’s reliance on a century of bankruptcy jurisprudence “establishes the framework for a measured — and hopefully expedited — legislative process,” the bondholders said in a statement.
The U.S. House Natural Resources Committee, chaired by Rob Bishop, released the draft legislation this week. The COFINA creditors, who hold roughly $17 billion in bonds, said the bill was encouraging because it “incorporated battle-tested restructuring precedents that balance the needs of the Puerto Rican people, defend against litigious hold-outs, and provide for the ‘fair and equitable treatment’ of creditors.”
“We also believe the creation of a fiscal oversight board that respects local laws and on-island needs is an essential element of any eventual bill. It is our hope that the legislation formally introduced next month maintains these key components and incorporates clearer language with respect to insolvency requirements,” the group said.