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Title II — Puerto Rico Debt Restructuring Compensation Fund

S. 1312 · 116th Congress · May 2, 2019 · Lineage

II Puerto Rico Debt Restructuring Compensation Fund

Sec. 201 Purpose

Pursuant to clause 1, section 8 of article I and clause 2, section 3 of article IV of the Constitution of the United States, the purpose of this title is to provide compensation to certain entities and natural persons that suffer economic losses due to a discharge under section 101 of financial obligations owed to those entities and natural persons by the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico.

Sec. 202 Definitions

In this title—
(1)
the term collateral source compensation—
(A)
means, on the date of a determination under section 204(b)(2)(A), compensation that a claimant has received or is entitled to receive, from a source other than the Fund, as a result of the discharge of the debt of the Commonwealth of Puerto Rico and the instrumentalities of the Commonwealth of Puerto Rico under section 101; and
(B)
includes financial guaranty insurance;
(2)
the term Fund means the Puerto Rico Debt Restructuring Compensation Fund established under section 205(a);
(3)
the term ineligible investment company means an investment company, as defined in section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a–3), that was not registered under section 8 of that Act (15 U.S.C. 80a–8) on the date on which the investment company made an investment in a financial obligation of the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico;
(4)
the term Puerto Rico public pension plan means a pension system of the government of the Commonwealth of Puerto Rico; and
(5)
the term Special Master means the Special Master appointed under section 203(a).

Sec. 203 Administration

(a)
Special Master—
(1)
Appointment—
(A)
In general— Not later than 60 days after the date of a discharge of the debt of the Commonwealth of Puerto Rico and the instrumentalities of the Commonwealth of Puerto Rico under section 101, the Chief Justice of the Supreme Court of the Commonwealth of Puerto Rico shall appoint a Special Master to administer the compensation program established under this title.
(B)
Disqualification— A Special Master may not have a relationship to a party, attorney, action, or court that would require the disqualification of a judge under section 455 of title 28, United States Code, unless, after the date on which the Special Master discloses any potential ground for disqualification, the party, attorney, action, or court with which the Special Master has a relationship, with the approval of the Chief Justice of the Supreme Court of the Commonwealth of Puerto Rico, consents to the appointment of the Special Master.
(2)
Status— The Special Master shall be considered to be an official of the Commonwealth of Puerto Rico.
(3)
Vacancy—
(A)
In general— In the event of the death, resignation, incapacity, or other vacancy in the position of the Special Master, the position shall be filled in the manner described in paragraph (1).
(B)
Federal Vacancies Reform Act— Sections 3345 through 3349d of title 5, United States Code, (commonly known as the “Federal Vacancies Reform Act of 1998”) shall not apply to vacancies in the position of Special Master.
(b)
Authorization of appropriations— There are authorized to be appropriated such sums as may be necessary to pay the administrative and support costs for the Special Master in carrying out this title.

Sec. 204 Determination of eligibility for compensation

(a)
Filing of claim—
(1)
In general— A claimant may file a claim for compensation under this title with the Special Master. The claim shall—
(A)
be on the form developed under paragraph (2);
(B)
state the factual basis, as certified by the claimant, for eligibility for compensation and the amount of compensation sought; and
(C)
provide evidence that corroborates the eligibility of the claimant for compensation and the amount of compensation sought.
(2)
Claim form—
(A)
In general— The Special Master shall—
(i)
develop a claim form that claimants shall use when submitting claims under paragraph (1); and
(ii)
ensure that the form developed under clause (i) can be filed electronically.
(B)
Contents— The form developed under subparagraph (A) shall request information relating to the claim of the claimant, including information relating to—
(i)
economic loss that the claimant suffered as a result of the discharge under section 101 of the debt of the Commonwealth of Puerto Rico and the instrumentalities of the Commonwealth of Puerto Rico;
(ii)
collateral source compensation the claimant has received, or is entitled to receive, as a result of the discharge described in clause (i); and
(iii)
availability of financial guaranty insurance coverage to indemnify the claimant.
(C)
Penalty— A claim submitted on the form developed under subparagraph (A) shall—
(i)
be submitted under penalty of perjury; and
(ii)
include an attestation by the claimant that the claimant has not willfully attempted to evade or defeat the eligibility restrictions described in subsection (c).
(b)
Review and determination—
(1)
Review— The Special Master shall review a claim submitted under subsection (a) and determine—
(A)
whether the claimant is an eligible person under subsection (c); and
(B)
with respect to a claimant determined to be an eligible person under subsections (c)(2)(A) and (c)(3)—
(i)
the extent of the economic loss to the claimant; and
(ii)
the amount of compensation to which the claimant is entitled based on the economic losses to the claimant, the facts of the claim, and the individual circumstances of the claimant, including—
(I)
the strength of the ties to the Commonwealth of Puerto Rico, as defined in regulations promulgated under section 206, of the claimant;
(II)
the financial need, as defined in regulations promulgated under section 206, of the claimant;
(III)
the price at which the claimant obtained that claim against the Commonwealth of Puerto Rico or the instrumentality of the Commonwealth of Puerto Rico; and
(IV)
the date on which the claimant obtained the claim against the Commonwealth of Puerto Rico or the instrumentality of the Commonwealth of Puerto Rico; and
(C)
with respect to a claimant determined to be an eligible person under subsection (c)(2)(B) and (c)(3)—
(i)
the extent of the economic loss to the claimant; and
(ii)
the amount of compensation to which the claimant is entitled based on the economic loss to the claimant, the facts of the claim, and the individual circumstances of the claimant, including—
(I)
the financial need, as defined in regulations promulgated under section 206, of the claimant;
(II)
the price at which the claimant obtained that claim against the Commonwealth of Puerto Rico or the instrumentality of the Commonwealth of Puerto Rico; and
(III)
the date on which the claimant obtained the claim against the Commonwealth of Puerto Rico or the instrumentality of the Commonwealth of Puerto Rico.
(2)
Determination—
(A)
In general— Not later than 120 days after the date on which a claim is determined to be substantially complete by the Special Master, the Special Master shall complete a review, make a determination, and provide written notice to the claimant, with respect to the matters that were the subject of the claim under review. Such a determination shall be final and not subject to judicial review.
(B)
Rights of claimants—
(i)
Hearings— Before the date on which a determination described in subparagraph (A) is made, a claimant in a review under paragraph (1) shall have the right to an in-person hearing conducted by the Special Master.
(ii)
Waiver— A claimant in a review under paragraph (1) may waive the right to a hearing described in clause (i).
(3)
Collateral source compensation— The Special Master shall reduce the amount of compensation determined under paragraph (2) by the amount of collateral source compensation.
(c)
Eligibility—
(1)
In general— A claimant shall be determined to be an eligible person for purposes of this subsection if the Special Master determines that such claimant—
(A)
is a person described in paragraph (2); and
(B)
meets the requirements of paragraph (3).
(2)
Eligible persons—
(A)
Eligible persons in the Commonwealth of Puerto Rico—
(i)
In general— A claimant is a person described in this subparagraph if the claimant is—
(I)
a natural person who—
(aa)
was domiciled in the Commonwealth of Puerto Rico and was a citizen or lawful permanent resident of the United States on September 20, 2017, regardless of whether that natural person was physically present in the Commonwealth of Puerto Rico at that time;
(bb)
is a beneficial owner of a security issued by the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico; and
(cc)
became a beneficial owner of the security described in item (bb) not later than September 20, 2017;
(II)
a bank or credit union that did business solely in the Commonwealth of Puerto Rico on September 20, 2017;
(III)
a worker association or workplace association in the Commonwealth of Puerto Rico;
(IV)
a Puerto Rico public pension plan;
(V)
a business, of which the principal place of business was in the Commonwealth of Puerto Rico on September 20, 2017; or
(VI)
subject to clause (ii), any other person that the Special Master determines is an eligible person.
(ii)
Exclusions— A claimant is not a person described in this subparagraph if the claimant is—
(I)
an ineligible investment company;
(II)
a financial guaranty insurer;
(III)
as defined in section 101 of title 11, United States Code—
(aa)
a party to a master netting agreement;
(bb)
a party to a repurchase agreement; or
(cc)
a party to a swap agreement;
(IV)
any other financial institution with total consolidated assets greater than $2,000,000,000;
(V)
a person that owns a share in an unregistered investment fund that owns a security issued by the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico;
(VI)
a person that acquired a claim against the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico during the period beginning on the date that is 180 days before the date of a discharge under section 101, unless that claim was acquired through devise, descent, or a divorce settlement;
(VII)
the Special Master; or
(VIII)
any other person that the Special Master determines is not an eligible person.
(B)
Eligible persons not in Puerto Rico—
(i)
In general— A claimant is a person described in this subparagraph if the claimant was not domiciled in the Commonwealth of Puerto Rico on September 20, 2017, and the claimant is—
(I)
a worker association or workplace association;
(II)
a pension plan;
(III)
a natural person who—
(aa)
is a beneficial owner of a security issued by the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico; and
(bb)
became a beneficial owner of that security not later than September 20, 2017;
(IV)
subject to clause (iii), an open-end mutual fund; or
(V)
subject to clause (ii), any other person that the Special Master determines is an eligible person.
(ii)
Exclusions— A claimant is not a person described in this subparagraph if the claimant was not domiciled in the Commonwealth of Puerto Rico on September 20, 2017, and the claimant is—
(I)
an ineligible investment company;
(II)
a closed-end company, as defined in section 5 of the Investment Company Act of 1940 (15 U.S.C. 80a–5);
(III)
a financial guaranty insurer;
(IV)
as defined in section 101 of title 11, United States Code—
(aa)
a party to a master netting agreement;
(bb)
a party to a repurchase agreement; or
(cc)
a party to a swap agreement;
(V)
any other financial institution with total consolidated assets greater than $2,000,000,000;
(VI)
a person that owns a share in an unregistered investment fund that owns a security issued by the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico;
(VII)
a person that acquired a claim against the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico during the period beginning on the date that is 180 days before the date of a discharge under section 101, unless that claim was acquired through devise, descent, or a divorce settlement;
(VIII)
the Special Master; or
(IX)
any other person that the Special Master determines is not an eligible person.
(iii)
Eligibility of open-end mutual funds— A claimant that is an open-end mutual fund is not an eligible person described in this subparagraph unless the manager of that open-end mutual fund pledges to waive the fee of that manager for any compensation the open-end mutual fund receives under this title.
(3)
Requirements for beneficial owners of securities— A person that is a beneficial owner of a security issued by the Commonwealth of Puerto Rico or an instrumentality of the Commonwealth of Puerto Rico may file a claim under subsection (a) if the person, as of the date on which the claim is filed—
(A)
has continuously held that security during the period beginning on September 19, 2017, and ending on the date on which the claim is filed; and
(B)
the claim is submitted not later than 180 days after the date of a discharge of the debt of the Commonwealth of Puerto Rico and the instrumentalities of the Commonwealth of Puerto Rico under section 101.
(d)
Compensation—
(1)
In general— A claimant may not receive compensation under this title if that claimant is not determined to be an eligible person under this subsection.
(2)
Limitations—
(A)
In general— A claimant may not receive compensation under this title that exceeds the amount of the claim filed by the claimant under subsection (a), or seek or receive compensation for a debt described in section 2(5)(B)(ii), which—
(i)
shall not be discharged; and
(ii)
shall be repaid in full as provided by section 101(b).
(B)
Assigned claims— In the case of a claim that was assigned to a claimant, the claimant may not receive compensation under this title for that claim that exceeds the amount paid by the claimant for the assignment of that claim.

Sec. 205 Puerto Rico Debt Restructuring Compensation Fund

(a)
In general— On the date of a discharge of the debt of the Commonwealth of Puerto Rico and the instrumentalities of the Commonwealth of Puerto Rico under section 101, there is established in the Treasury of the United States a fund to be known as the “Puerto Rico Debt Restructuring Compensation Fund”, consisting of amounts appropriated into the Fund under subsection (b).
(b)
Appropriation—
(1)
In general— There is appropriated to the Fund, out of any funds in the Treasury of the United States not otherwise appropriated, $15,000,000,000, which shall be available without further appropriation to the Special Master to provide compensation for claims of eligible persons under this title.
(2)
Emergency designation—
(A)
In general— The amount necessary to carry out this Act is designated by Congress as being for emergency requirements pursuant to section 251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 901(b)(2)(A)(i)).
(B)
PAYGO—
(i)
In general— This Act is designated as an emergency requirement pursuant to section 4(g) of the Statutory Pay-As-You-Go Act of 2010 (2 U.S.C. 933(g)).
(ii)
Designation in Senate— In the Senate, this Act is designated as an emergency requirement pursuant to section 403(a) of Senate Concurrent Resolution 13, 111th Congress, agreed to April 29, 2009.
(c)
Distribution—
(1)
In general— Of the amounts appropriated into the Fund under subsection (b)—
(A)
50 percent shall be made available to pay claims of eligible persons described in section 204(c)(2)(A); and
(B)
50 percent shall be made available to pay claims of eligible persons described in section 204(c)(2)(B).
(2)
Claims exceeding appropriated amounts— If the claims of eligible persons described in section 204(c)(2)(A) or of eligible persons described in section 204(c)(2)(B) exceed the amounts appropriated to pay those respective claims under paragraph (1), any claim of an eligible person within that respective category shall be reduced on a pro rata basis.
(3)
Date of distribution— For the purpose of reducing claims under paragraph (2), the Special Master shall determine a date on which all claims of eligible persons shall be paid.
(d)
Unobligated funds— Any amounts made available under subsection (b) that are not obligated by the Special Master as of the date that is 36 months after the date of enactment of this Act shall be returned to the Treasury of the United States.

Sec. 206 Regulations

(a)
In general— The Special Master shall promulgate regulations, through notice and comment rulemaking in compliance with section 553 of title 5, United States Code, to carry out this title.
(b)
Notice of proposed rulemaking— Not later than 60 days after the date on which the Special Master is appointed under section 203(a), the Special Master shall publish a notice of proposed rulemaking in the Federal Register.
(c)
Final rule— Not later than 60 days after the date on which the notice of proposed rulemaking described in subsection (b) is published, the Special Master shall promulgate final regulations to carry out this title.
(d)
Vacancy in the position of Special Master— If promulgation of regulations under this section is completed before the date on which a Special Master is appointed under section 203(a)(3)(A), that Special Master is not required to promulgate new regulations under this section.

Sec. 207 Sunset

The provisions of this title shall be effective for the period beginning on the date of enactment of this Act and ending on the date that is 36 months after the date of enactment of this Act.