A Brief Overview on the PROMESA Title III cases filed by the Commonwealth and COFINA
PROMESA Debt Restructuring On May 3, 2017 and May 5, 2017, the Commonwealth of Puerto Rico (the “Commonwealth”) and
the Puerto Rico Sales Tax Financing Corporation (“COFINA”), by and through the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), filed a petition under title III of PROMESA. The Oversight Board was created by Section PROMESA, and has the authority to designate any territorial instrumentality as subject to the provisions of the Act. Pursuant to Section 315 of PROMESA, the Oversight Board acts as the representative of the debtor (the Commonwealth and COFINA). The members of the Oversight Board were appointed by President Obama.
Title III of PROMESA provides the means for the Commonwealth and COFINA to work with its creditors to adjust its debts (restructure the debt), just like in a regular bankruptcy proceeding. The petitions filed by the Commonwealth and COFINA are currently being jointly administered. Judge Laura Taylor Swain, a United States District Judge of the United States District Court for the Southern District of New York, is handling the petitions filed by the Commonwealth and COFINA. All documents in the Title III cases are filed in the Bankruptcy Court's docketing system for ease of administration. Guy Gebhardt, Acting Trustee for Region 21, has two (2) main responsibilities under Title III: (1) the appointment of committees under Bankruptcy Code Section 1102, and (2) the review of request for compensation of professionals employed by the Oversight Board, the debtors, and committees.