García Padilla insists on use of Title III of Promesa
SAN JUAN — Governor Alejandro García Padilla issued a letter to governor-elect Ricardo Rosselló asking the incoming administration demand the Financial Oversight and Management Board the authorization of a restructuring process of the public debt through depositions found in Title III of the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).
In the missive sent Wednesday, García Padilla said that even if the government achieves a brief extension of the stay on litigations 8decreed in PROMESA and in the Emergency Moratorium and Financial Rehabilitation Act, it would face serious difficulties fulfilling its obligations due to other pressures, such as the depletion of non-recurring funds assigned to Puerto Rico by the Affordable Care Act —better known as Obamacare— and the lack of liquidity from government pensions.
“The Commonwealth must not consent to a debt service that is not sustainable in the long run,” said García Padilla in the missive also sent to members of the Financial Oversight and Management Board.
The governor added that the fiscal challenges facing the island make resorting to Title III “inevitable”. Title III is a hybrid between provisions of Chapter 9 and Chapter 11 of the Federal Bankruptcy Law.
“There will be attempts to amend Title III of PROMESA to give priority to certain creditors over other bondholders… The government must be vigilant of all attempts to diminish the power of the restructuring process,” he added.