Thursday, October 22, 2020

Puerto Rico Fiscal Board Designates David Skeel as Chairman

By on October 6, 2020

Puerto Rico fiscal board member David Skeel (CB file)

U.S. Supreme Court reaffirms board authority to restrict government spending

SAN JUAN — Puerto Rico’s Financial Oversight and Management Board (FOMB) announced Tuesday the designation of member David Skeel, a bankruptcy and corporate law professor, as its new chairman, effective immediately. Skeel will replace José Carrión III, whose tenure as chairman ended Monday.

The four remaining board members—Arthur González, Ana Matosantos and Andrew Biggs—voted unanimously in favor of Skeel’s designation, the panel said.

Earlier this year, board members Carlos García and José Ramón González also left their seats after serving for more than three years each.

“I am thankful to be designated for this role and continue the Fiscal Oversight Board’s mission for the good of the people of Puerto Rico,” Skeel said in response to the designation. “It is an honor to keep working with my fellow board members and Executive Director Natalie Jaresko in helping steer Puerto Rico’s fiscal and economic environment into a brighter future. José’s shoes will be certainly impossible to fill, but I look forward to step into the role moving onwards.”

During discussion of the revised 2020 fiscal plan during the FOMB’s 18th public meeting on May 27, Skeel stressed it was imperative for the commonwealth government to reach settlements with its creditors and emerge from Title III bankruptcy, otherwise, he said, “Puerto Rico will not truly begin to recover and begin to see the glimmer of economic prosperity.”

Skeel said during the meeting, held via teleconference, that most of the island’s creditors have not been paid in four years, and that “at some point it is only fair that they get paid part of what they were owed.” He reminded the government that the oversight board’s mission will not end until it achieves four consecutive years of balanced budgets.

Skeel said that the amended Plan Support Agreement (PSA), which the FOMB submitted in February to the federal court and proposes a global settlement on certain central government debt, “was far from perfect, but has widespread creditor support.”

“I believe the framework for the PSA is still likely to be the best starting point for a confirmable plan of adjustment,” he said. “We need to turn back to it as soon as the current crisis eases.”

However, in his presentation, Skeel stressed it was imperative for the commonwealth government to reach settlements with its creditors and emerge from Title III bankruptcy, otherwise, he said, “Puerto Rico will not truly begin to recover and begin to see the glimmer of economic prosperity.”

Skeel said that most of the island’s creditors have not been paid in four years, and that “at some point it is only fair that they get paid part of what they were owed.” He reminded the government that the oversight board’s mission will not end until it achieves four consecutive years of balanced budgets.

Skeel belonged to the Special Claims Committee, along with Matosantos, Arthur González and Briggs, created by the board to evaluate the findings of an investigation into the causes of the island’s debt conducted by the firm Kobre & Kim to determine potential claims.

Skeel is a S. Samuel Arsht professor of corporate law at the University of Pennsylvania Law School, a position he has held since 2004 after joining the institution in 1999. From 1990 to 1998, Skeel taught at Temple University School of Law, where he was an associate professor from 1993 to 1998 and an assistant professor from 1990 to 1993. Skeel earned a bachelor of arts from the University of North Carolina at Chapel Hill and his juris doctor degree from the University of Virginia School of Law.

Supreme Court backing

The  board  also issued a statement Tuesday in which it welcomed the U.S. Supreme Court’s decision Monday denying the government of Puerto Rico’s request for review of the opinion of the U.S. Court of Appeals for the First Circuit restricting the government’s spending powers to only those authorized by the board. 

“The Supreme Court rejected a government’s appeal, which sought the ability to spend unidentified funds that were left unused from previous, pre-PROMESA, budgetary cycles. This effort by the Puerto  Rico  Government  violated  the  Board’s  Certified  Fiscal  Plan  and  the  requirements established by PROMESA,” the bboard said. 

The U.S. Appeals Court in Boston had stated that the Puerto Rico governor cannot carry out expenditures unless authorized through a Board-certified fiscal plan and budget. In addition, the U.S. Appeals  Court ruled that the board can make its fiscal  plan recommendations  mandatory.