Board confirms Title III PROMESA filing for the Commonwealth

The Financial Oversight Board (JSF) announced on May 3, 2017 that it approved and certified the filing in the U.S. District Court for the District of Puerto Rico of a voluntary petition under Title III of PROMESA for the Commonwealth of Puerto Rico, Metro Puerto Rico reported.

Chairman José Carrión explained in a written statement that the Board determined it necessary and appropriate for the Government to file that petition to protect residents and the interests of its creditors, given that the PROMESA litigation stay expired at midnight Monday. He also said that expiration left the government and its entities vulnerable to creditor litigation.

Carrión emphasized that the filing should not preclude negotiations for a consensual voluntary restructuring. “The Oversight Board continues to believe that consensual negotiations, to the extent possible, are preferable and will continue them with all creditor groups willing to do so. This filing does not represent the end of those discussions,” he said.

He assured that the certified Fiscal Plan already contains substantial spending cuts and revenue increases, plus structural reforms for the labor force and growth, but “the Government’s liquidity and solvency problems are enormous” and Title III is necessary to protect the people and avoid a greater economic impact from an avalanche of litigation and uncertainty. He concluded that the Board acts only to fulfill PROMESA’s purpose: a method for the Government and its instrumentalities to achieve fiscal responsibility and access to capital markets. Filing is not a judgment or a confirmed plan of adjustment.