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PROMESA Amusement

posted by Stephen Lubben

I'm still working through the new draft of the PROMESA bill, which readers will recall provides new restructuring options for US territories (including Puerto Rico, of course). But I have to say I got a chuckle out of proposed section 303(3), which provides:

unlawful executive orders that alter, amend, or modify rights of holders of any debt of the territory or territorial instrumentality, or that divert funds from one territorial instrumentality to another or to the territory, shall be preempted by this Act.

If the orders are unlawful, do we really need a federal statute to preempt them?

May 19, 2016 at 7:49 AM in Municipal Bankruptcy, Puerto Rico, Sovereign Debt

Comments

Professor Lubben I think the Congressional language is preempting executive orders of the Puerto Rico Governor. So yes the language is very necessary.

Posted by: Cate Long | May 19, 2016 at 08:11 AM

Not if they were "unlawful" to begin with.

Posted by: Stephen Lubben | May 19, 2016 at 08:13 AM

If you have been following the local debt moratorium recently passed by the Puerto Rico Legislature you would have an excellent example of what the Congressional language is pointing to.

ie does a territorial government have authority to place a stay on creditor lawsuits?

One might think Congress wouldn't need to be explicit but in the case of Puerto Rico you would be wrong.

Posted by: Cate Long | May 19, 2016 at 08:16 AM

The comments to this entry are closed.

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