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Urgency is necessary - Mudd get's it wrong

ohliz
Wed, 04 Jan 2017 16:25:47 GMT

>As of this writing, the PR Supervisory Board insists on having a fiscal plan approved on or before January 31st. This gives the new administration, which will bear the brunt of the start of the fiscal plan, very little time to contribute to the final version. Today, new Governor Ricardo Rosselló has asked the Board to extend both its deadline for the fiscal plan and the PROMESA stay, which is set to expire on February 15 as things stand. >To me, the governor’s request makes perfect sense. It’s also perfectly in line with what PROMESA actually says. Why should the Board rush to have the Fiscal Plan in place, without giving the new administration time to assess the situation and weigh in? After all, Congress has made clear that the true goal of PROMESA is to promote and facilitate consensual negotiation between the government and its many creditors – something that would be made all the more difficult if that government is rushed to adopt a plan with which it is not comfortable. John Mudd misses the forest for the trees in his recent [article](http://controlboardwatch.o rg/no-rush-bankruptcy/) quoted above. Even if PR gets an extension from the Oversight Board (which as he admits, may not be available until PR negotiates in good faith with creditors), that only pushes the PROMESA stay out until May 1, 2017. Delay with approving the fiscal plan only makes things worse for PR. Once the PROMESA stay expires, that's it. No other stay is available until a Title III case is commenced. There is a monumental amount of work that must be completed before a Title III restructuring can happen (e.g. Sec. 2146(a)(1)-(2) - PR must have procedures for delivering audited financials, public draft financials sufficient for creditors to make an informed decision). Honestly, it's questionable whether PR can even engage in good faith negotiations without jumping through the hoops required in putting together a fiscal plan. Point is, every day PR is late on putting together the fiscal plan is another day that PR will be exposed when the PROMESA stay expires. >In light of the urgency of the topic, he will ask the Oversight Board (OB), which is in charge of the Island’s finances, to extend the Moratorium Act under the federal statute PROMESA. He is willing to draft a fiscal plan, but the available time frame is “unrealistic.” The OB is expecting a fiscal plan by January 15. “If we get that extension, there’s no need to have the fiscal plan by the 15 (of January). I think it’s in their best interests. It’s in the interests of the Board, of Congress, and it gives me time to renegotiate the debt and have a larger field towork in, and even negotiate with creditors,” he indicated. [Link](http://www.elnuevodia.com/english/english/nota/fouryearsofintensityandchallenges-2277427/) And on these comments from Rossello, unless I'm mistaken, the Oversight Board may not extend PR's moratorium act. Not only is the moratorium act almost certainly preempted, [Sec. 2163](http://www.promesacodex.com/48-usc-sect-2163.html) the Oversight Board may only exercise the powers available to it under PROMESA. PROMESA does not allow for the Oversight Board to approve or implement nonconsensual debt moratoria, in fact, it expressly prohibits such actions.

mrbond
Wed, 04 Jan 2017 16:34:42 GMT

The OB may keep the current deadline in place for a reason: >(2) Development by Oversight Board > If the Governor fails to submit to the Oversight Board a Fiscal Plan that the Oversight Board determines in its sole discretion satisfies the requirements set forth in subsection (b) by the time specified in the notice delivered under subsection (a), the Oversight Board shall develop and submit to the Governor and the Legislature a Fiscal Plan that satisfies the requirements set forth in subsection (b). [§ 2141(d)(2)](http://www.promesacodex.com/48-usc-sect-2141.html)