U.S. Senators Bob Menendez (D-N.J.), Marco Rubio (R-Fla.), Richard Blumenthal (D-Conn.) and John Kennedy (R-La.) introduced the Puerto Rico Recovery Accuracy in Disclosures Act of 2019 (PRRADA, for short.)
The bipartisan legislation would provide robust disclosure requirements to all of the Financial Oversight and Management Board for Puerto Rico’s advisers and consultants, closing a loophole in the existing law.
PRRADA would require vendors to disclose their relationships, guaranteeing to the people of Puerto Rico the same transparency and disclosure practices required by law in U.S. mainland bankruptcies. Companion legislation was introduced in the U.S. House of Representatives by Rep. Nydia Velazquez (D-N.Y.)
In 2016, Congress passed the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) to set up an orderly bankruptcy process to restructure the island’s debts, pay off creditors, approve infrastructure projects, and stimulate economic development.
At the time, the law failed to add a requirement for advisers and consultants to disclose their own conflicts of interests with the variety of creditors to whom Puerto Rico owes $123 billion, the lawmakers said.
“Although I opposed PROMESA vehemently, I still believe that the cadre of advisors and consultants created as a result of that law must be held accountable to the same transparency standards required by law in the mainland,” said Menendez.
“Our legislation will close the current loophole, establishing robust disclosure requirements for bankruptcy advisors, and allowing the courts to deny payment to any bad actors with conflicts therefore making it more transparent for Puerto Ricans,” he said.
“Transparency and accountability are critical to ensuring Puerto Rico’s restructuring process is successful,” Rubio said. “I’m proud to have worked with Senator Menendez to introduce this important bill that will extend the disclosure requirements to professionals seeking compensation under title III of PROMESA.”
“Our bill will give the people of Puerto Rico the same transparency and accountability that corporate shareholders already enjoy to ensure the people and companies making decisions for them are free of conflicts of interest,” said Blumenthal.
“It is a crucial, common sense step to protect the more than 3 million American citizens on Puerto Rico from corrupt and conflicted practices,” he said.