Congress has passed and President Obama has singed the Puerto Rico relief bill (“PROMESA”). The bill mandates a seven-member oversight board. The board will have the power to require balanced budgets and fiscal plans. In addition, the board may file debt restructuring petitions on behalf of the Commonwealth in federal district court if voluntary negotiations fail.
The passage came one day before Puerto Rico is expected to default on a $2 billion debt payment. The relief bill puts a temporary moratorium on debt-related litigation. The litigation moratorium covers litigation filed between December of 2015 and the later of February 15, 2017 or six months after the board is established.
