PROMESA Observations

After taking a look at titles III and VI of the new draft, some quick observations:

• After some waffling between drafts, it is now clear that title III cases will be heard by district court judges. The judge for a case involving a territory (as opposed to a sub-entity) will be chosen by the Chief Justice. Venue will either be in the territory, or in another place where the oversight board has an office. As I've previously noted, that clearly opens up the possibility of New York.
• One draft of the bill had incorporated sections 327 et al. regarding professional retention and compensation. I noted that was inconsistent with chapter 9, and incorporation of those sections disappeared in the next draft. Now the new draft has its own professional compensation provision in proposed section 316 (see also section 317).
• Title VI continues to be a provision that is rather obviously stapled onto the larger bill:  see, for example, section 601, which redefines "Oversight Board" as "Administrative Supervisor" for purposes of Title VI alone.  I have a suggestion:  there is a "find and replace" function in Word ...
• I continue to worry that title VI's process for splitting bondholders up into various "pools" is a morass waiting to happen, especially given the possibility of competing workout proposals under title VI.
• That said, much of the "gating" features of the previous versions of title VI are now gone (i.e., it seems it would now be possible to go directly to title III, subject to the oversight board's 5 out of 7 vote).
• The composition of the oversight board gets more convoluted with each iteration of the bill.

Overall, although the bill is not necessarily "ideal" or "optimal," it seems to at least be making forward progress.  Of course, the Senate has not weighed in at all on this ... at least not publicly. And we should probably expect that even when enacted the bill is apt to be hit with a Recovery Act style Constitutional challenge.