Thursday, August 17, 2017

La Fortaleza yet to say if fiscal board has notified it about Title III

By on May 1, 2017

SAN JUAN – During a press conference Monday morning, Public Affairs Secretary Ramón Rosario did not specify whether the fiscal control board has already notified La Fortaleza about any action to be commenced under Promesa’s Title III.

“There is no announcement yet from [the Fiscal Agency & Financial Advisory Authority, or FAFAA], which should be the agency that issues that particular matter. I imagine if that occurs, it will be [FAFAA] the agency that provides those comments,” the official replied to a Caribbean Business’ question.

However, Rosario assured that, “if the creditors remain intransigent, then we will go to Title III to defend the people of Puerto Rico,” and reiterated that the government is not ruling out that path to restructure a large part of Puerto Rico’s public debt.

“The governor has acted in good faith in negotiations with creditors. That doesn’t mean we will be submissive,” the official said.

Uncertainty remains as to when and if the board will finally certify cases under Title III of the federal law and thus initiate in-court restructuring proceedings. The latter would maintain a stay on litigation that is scheduled to end Monday, according to Promesa.

However, as previously reported by CB, the fiscal board has taken steps in preparation for the possibility of initiating legal action under Title III. On Friday, it approved a resolution empowering its members to approve the use of the mechanism without having to convene a public meeting.

Fiscal board opens door to Promesa’s Title III

Promesa states that a bankruptcy proceeding under Title III begins with the board’s certification of such action. Meanwhile, Rosario explained that the oversight board could file Title III cases in court “by debt issuer or several issuers together.”

Meanwhile, the administration of Gov. Ricardo Rosselló insists it is still trying to reach consensual agreements with its creditors. However, general obligation bondholders as well as those from the Sales Tax Financing Corp. (Cofina by its Spanish acronym), among other creditors, have rejected a restructuring offer recently proposed by the government.

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