PROMESA
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| Long title | To establish an Oversight Board to assist the Government of Puerto Rico, including instrumentalities, in managing its public finances, and for other purposes. |
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| Acronyms (colloquial) | PROMESA |
| Enacted by | the 114th United States Congress |
| Effective | June 30, 2016 |
| Citations | |
| Public law | Pub.L. 114-187 |
| Legislative history | |
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The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) —designated as Pub.L. 114–187 and originally as H.R. 5278— is a federal law enacted by the United States Congress that establishes an oversight board, a process for restructuring debt, and expedited procedures for approving critical infrastructure projects in order to combat the Puerto Rican government-debt crisis. With this protection the then-governor of Puerto Rico, Alejandro García Padilla, suspended payments due on July 1.
PROMESA enables the island's government to enter a bankruptcy-like restructuring process and halt litigation in case of default. Specifically, the establishment of the oversight board operates as an automatic stay of creditor actions to enforce claims against the government of Puerto Rico. The oversight board is to facilitate negotiations, or, if these fail, bring about a court-supervised process akin to a bankruptcy. The board is also responsible for overseeing and monitoring sustainable budgets. The President appointed all seven members of the board, six of whom were chosen from a list of individuals recommended by Congressional leaders. The Governor of Puerto Rico (or a designee) serves ex officio as an eighth member without voting rights. PROMESA authorizes the oversight board to designate a territory or territorial instrumentality as a "covered entity." Once designated, the covered entity is subject to the terms of PROMESA. On September 30, 2016, the oversight board designated the Commonwealth of Puerto Rico and certain other territorial instrumentalities as covered entities under PROMESA. As a covered entity, Puerto Rico is required to submit a fiscal plan. A fiscal plan must provide a method to achieve fiscal responsibility and access to the capital markets, and:
On October 14, 2016, Puerto Rico submitted a proposed fiscal plan to the oversight board. On November 23, 2016, the oversight board released its initial assessment of the fiscal plan submitted by Puerto Rico. The oversight board requested that the fiscal plan be amended to incorporate the following:
On November 29, 2016, the Governor of Puerto Rico responded to the oversight board's assessment of the Commonwealth's proposed fiscal plan.
In late January 2017, the board created under PROMESA gave the government of Puerto Rico until February 28 to present a fiscal plan (including negotiations with creditors) to solve the problems. It is essential for the Commonwealth to reach restructuring deals to avoid a bankruptcy-like process under PROMESA.A moratorium on lawsuits by debtors was extended to May 31.
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