WASHINGTON – Legislators and others meeting at a Puerto Rico forum here on Tuesday highlighted what they believe is the need for Puerto Rico to pursue in-court restructuring under the PROMESA law now that the law’s stay on debt litigation has expired.
The forum was organized by top Democrat on the House Natural Resources Committee Raul Grijalva, D-Ariz., and Congressional Hispanic Caucus chair Michelle Lujan Grisham, D-N.M. It included short speeches by a number of legislators and others who have been following Puerto Rico’s fiscal crisis.
Puerto Rico is currently struggling with roughly $70 billion of debt and $50 billion in unfunded pension obligations. The commonwealth’s debt is now open to creditor lawsuits after the stay on such litigation expired Monday.
Simon Johnson, a professor of entrepreneurship at the MIT Sloan School of Management, said such litigation will give rise to “various forms of chaos,” and added that every day that goes by without Puerto Rico seeking its own in-court restructuring represents a “growing danger of disruptive litigation.”
Johnson recommended that Puerto Rico Gov. Ricardo Rosselló go to Puerto Rico’s seven-member oversight board and ask it to approve the commonwealth’s use of Title III of PROMESA. Title III lays out a bankruptcy-like process that the commonwealth can use to restructure its debts.
Eric LeCompte, executive director of Jubilee USA Network, agreed with Johnson, saying “it is incumbent on the oversight board and governor to authorize restructuring as soon as possible.”
Rep. Nydia Velázquez, D-N.Y., did not speak at the event but released a statement earlier on Tuesday that echoed the sentiments of those at the forum. She said Rosselló must “either get on board or get out of the way” when it comes to using Title III and that it is “unconscionable” that Puerto Rico would not use the “powerful tool” it has under PROMESA.
“Puerto Rico is no longer shielded from creditors rushing to the courthouse to lay claim to its assets … The people of Puerto Rico have had enough,” she said. “The governor and the board have a moral imperative to act immediately. If they fail to do so, history will judge them harshly.”
Title III would also require an audit of Puerto Rico debt, something that legislators speaking at the forum applauded.
Rep. Jose Serrano, D-N.Y., said during the event that it is time to publicly call for an auditing of the debt because “people need to know how this debt was incurred” as well as what steps can be taken to ensure something like what happened in Puerto Rico doesn’t happen again. Rep. Darren Soto, D-Fla., echoed Serrano’s call for the audit.
Soto and Serrano additionally pointed to the progress they and other legislators have had in getting Congress to talk about Puerto Rico, particularly in the recent spending bill that would fund the government through September. Puerto Rico would receive close to $300 million for Medicaid funding under the bill to address an impending “Medicaid cliff” that will result from the commonwealth’s federal healthcare funding running out by the end of the year.
While he noted that there is much more work to be done, Soto called the Medicaid allocation “an astounding accomplishment” for legislators who have been trying to help Puerto Rico.
