The publication is reproduced in full below:
PUERTO RICO RECOVERY ACCURACY IN DISCLOSURES ACT OF 2021
Ms. JACKSON LEE. Madam Speaker, I move to suspend the rules and pass 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 bill is as follows:
H.R. 1192
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 2021'' 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 gentlewoman from Texas (Ms. Jackson Lee) and the gentleman from North Carolina (Mr. Bishop) each will control 20 minutes.
The Chair recognizes the gentlewoman from Texas.
General Leave
Ms. JACKSON LEE. Madam 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 gentlewoman from Texas?
There was no objection.
Ms. JACKSON LEE. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, as I always do, let me thank the sponsor of this legislation for her leadership, the gentlewoman from New York (Ms. Velazquez), and all of those who have supported this important leadership bill.
H.R. 1192, the Puerto Rico Recovery Accuracy In Disclosures Act, or PRRADA, is commonsense legislation that would promote greater transparency and integrity with respect to 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 a 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.
Though 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 authorize the United States Trustee to object to compensation requested by the professionals.
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.
I thank Ms. Velazquez for her leadership in championing this bill and for her relentless dedication, which we all have witnessed, 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 Congress by a unanimous vote.
Madam Speaker, as a senior member of the Judiciary, Committee, I rise in strong support of H.R. 1192, the ``Puerto Rico Recovery Accuracy in Disclosures Act of 2021'' 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. 1192, the ``Puerto Rico Recovery Accuracy in Disclosures Act of 2021'' 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 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. 1192 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. 1192, the ``Puerto Rico Recovery Accuracy in Disclosures Act of 2021.''
Madam Speaker, I reserve the balance of my time.
Mr. BISHOP of North Carolina. I yield myself as much time as I may consume.
I rise today in support of the Puerto Rico Recovery Accuracy in Disclosures Act.
In 2016, Puerto Rico was experiencing significant financial pressures brought on by sizable debt and related obligations. In response to Puerto Rico's financial crisis, Congress enacted the Puerto Rico Oversight, Management, and Economic Stability Act of 2016. The 2016 law established a bankruptcy mechanism for Puerto Rico to address its obligations.
Like the general bankruptcy law, the 2016 law enables bankruptcy professionals, like accountants, consultants, and lawyers, to apply for payment for their services upon court approval. But the 2016 law omitted disclosure requirements that apply to compensated professionals in proceedings under the general Bankruptcy Code, title 11 of the United States Code, pursuant to rule 2014(a) of the Federal Rules of Bankruptcy Procedure.
Most significantly, the gap in the 2016 law created a potential for undisclosed compensation terms and undiscovered conflicts of interest vis-a-vis parties of interest for professionals serving in Puerto Rico's bankruptcy.
To address this concern, this bill applies the disclosure requirements of rule 2014(a) to professionals serving in connection with Puerto Rico's bankruptcy and seeking compensation for those services.
The bill also requires oversight of the disclosures that bankruptcy professionals make.
This bill's disclosure and oversight requirements increase the likelihood that conflicts of interest will be caught and timely addressed before compensation decisions are made.
Taken as a whole, this added transparency will benefit important interests, such as those of creditors and taxpayers--and ultimately, of Puerto Rico itself.
Madam Speaker, I encourage my colleagues to support this bill, and I reserve the balance of my time.
{time} 1715
Ms. JACKSON LEE. Madam Speaker, I yield 4 minutes to the gentlewoman from New York (Ms. Velazquez), the author of this legislation and also a champion, as all Members of the United States Congress know, during the very trying and difficult times of our friends in Puerto Rico. It is her voice that has been the most singularly powerful in their advocacy, along with her wonderful colleague, the distinguished representative, the Resident Commissioner from Puerto Rico.
Ms. VELAZQUEZ. Madam Speaker, I rise in strong support of H.R. 1192. I was proud to introduce this bill with bipartisan support in the House.
I would like to take this opportunity to thank Speaker of the House Nancy Pelosi and Chairman Jerry Nadler for bringing this legislation to the floor, and Mr. Bishop, the ranking member of the subcommittee, and Senator Bob Menendez for introducing a companion bill in the Senate.
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, or PROMESA, to set up an orderly bankruptcy process to restructure its debt, stimulate economic development, and put the island on a path to financial recovery. This bill will extend current U.S. law, requiring disclosures of conflicts of interest to Puerto Rico, thereby improving transparency and restoring confidence in the island's future.
Puerto Ricans should be confident that the board's bankruptcy advisers do not have their thumb on the scale to favor certain debts where they have a self-interest. This bipartisan bill ensures integrity of the PROMESA process.
While we can have different 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 staff, and the bipartisan cosponsors of the bill. I strongly encourage all Members to vote ``yes'' on this critical piece of legislation. I also would like to recognize the gentlewoman from Puerto Rico (Miss Gonzalez-Colon), who is a cosponsor of the bill.
Mr. BISHOP of North Carolina. Madam Speaker, I yield 5 minutes to the gentlewoman from Puerto Rico (Miss Gonzalez-Colon).
Miss GONZALEZ-COLON. Madam Speaker, I rise in support of the Puerto Rico Recovery Accuracy in Disclosures Act, H.R. 1192.
Representative Velazquez and myself have proposed this bipartisan initiative in the last two Congresses, having achieved passage in the House during the last session. I think Congresswoman Velazquez is very thoughtful in terms of how important this is and the effects on PROMESA regarding this bill.
We support this bill as an important component in ensuring the restructuring process under PROMESA, and it looks out for Puerto Rico's interests.
This legislation requires any counsel and professional personnel that the financial oversight 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 oversight board prior to being compensated.
These provisions extend the same requirements to decisions about the hiring of personnel for the restructuring as are imposed on such personnel under existing bankruptcy rules. I think it is important to have the same kind of rules for those people who are going to be managing, as we speak, those kinds of negotiations.
Our intention is not to exclude any people with expertise and knowledge about 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 be playing can be better evaluated.
Conflict of interest, or the appearance of a conflict of interest, can be best avoided if there are accountability and transparency during the process. This bill would allow that to happen.
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's debt and in any claims involving Puerto Rico's debt, informing the identity of each one.
Anyone who is serving in the board--and I repeat, anyone who is serving in the board--working to inform its decisions, or representing it before the title III court, must have the trust of all parties that they are committed to defending the interests of Puerto Rico to the best of their ability in accordance to the law and justice.
A lack of transparency in personnel decisions creates a lack of confidence and distrust. Learning that someone was involved in the business of one of the parties in the case, only after they are named and working on the case, does not create assurance of their commitment to the best interests of Puerto Rico or even managing the debt.
Our goal must be to reach the day that we will no longer need the provisions of PROMESA or the fiscal oversight board, and we can dedicate ourselves to rebuild our economy and provide for growth. But until that happens, we must demand that those instruments created by PROMESA be accountable and transparent in their processes. Anything else should be unacceptable.
That is the reason this bill, H.R. 1192, is important, and I ask my colleagues to support and pass this bill.
Madam Speaker, I say thank you to the Congresswoman from New York
(Ms. Velazquez) for this bill and for allowing this initiative to be a bipartisan one.
Mr. BISHOP of North Carolina. Madam Speaker, I thank the gentlewoman from Puerto Rico, and I thank the gentlewomen from Texas and New York.
Madam Speaker, I urge my colleagues to support the bill, and I yield back the balance of my time.
Ms. JACKSON LEE. Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, let me indicate again, this is a very vital initiative to continue to help in Puerto Rico's recovery. Let me thank the gentlewoman from New York for her leadership and, of course, the gentlewoman from Puerto Rico. This partnership and bipartisan collaboration with the other cosponsors is very crucial as we continue to work as a Congress to do our job for the people of Puerto Rico.
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.
Again, I thank my colleague, Ms. Velazquez from New York, the author of the bill, for her leadership on this issue, and Mr. Nadler and his work.
I strongly urge my colleagues to support this commonsense measure. This, of course, along with the gentlewoman from Puerto Rico, is helping the people of Puerto Rico, our neighbors and our fellow Americans.
Madam Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the gentlewoman from Texas (Ms. Jackson Lee) that the House suspend the rules and pass the bill, H.R. 1192.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds being in the affirmative, the ayes have it.
Mrs. GREENE of Georgia. Madam Speaker, on that I demand the yeas and nays.
The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution 8, the yeas and nays are ordered.
Pursuant to clause 8 of rule XX, further proceedings on this motion will be postponed.
____________________
SOURCE: Congressional Record Vol. 167, No. 34
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