---
kind: "section"
citation: "48 U.S.C. § 2231"
title: "48"
title_heading: "Territories and Insular Possessions"
number: "2231"
heading: "Creditor collective action"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/48/2231"
units:
  - "Chapter 20 — Puerto Rico Oversight, Management, and Economic Stability"
  - "Subchapter VI — Creditor Collective Action"
---

# §2231. Creditor collective action

- (a) **Definitions—** In this subchapter:
  - (1) **Administrative Supervisor—** The term “Administrative Supervisor” means the [Oversight Board](/usc/48/2104.md?p=17) established under [section 2121 of this title](/usc/48/2121.md).
  - (2) **Authorized Territorial Instrumentality—** The term “Authorized [Territorial Instrumentality](/usc/48/2104.md?p=19-A)” means a [covered territorial instrumentality](/usc/48/2104.md?p=7) authorized in accordance with [subsection (e)](#e).
  - (3) **Calculation Agent—** The term “Calculation Agent” means a calculation agent appointed in accordance with [subsection (k)](#k).
  - (4) **Capital Appreciation Bond—** The term “Capital Appreciation [Bond](/usc/48/2104.md?p=2)” means a [Bond](/usc/48/2104.md?p=2) that does not pay interest on a current basis, but for which interest amounts are added to principal over time as specified in the relevant offering materials for such [Bond](/usc/48/2104.md?p=2), including that the accreted interest amount added to principal increases daily.
  - (5) **Convertible Capital Appreciation Bond—** The term “Convertible Capital Appreciation [Bond](/usc/48/2104.md?p=2)” means a [Bond](/usc/48/2104.md?p=2) that does not pay interest on a current basis, but for which interest amounts are added to principal over time as specified in the relevant offering materials and which converts to a current pay [bond](/usc/48/2104.md?p=2) on a future date.
  - (6) **Information Agent—** The term “Information Agent” means an information agent appointed in accordance with [subsection (l)](#l).
  - (7) **Insured Bond—** The term “[Insured Bond](/usc/48/2161.md?p=c-4)” means a [bond](/usc/48/2104.md?p=2) subject to a financial guarantee or similar insurance contract, policy or surety issued by a monoline insurer.
  - (8) **Issuer—** The term “Issuer” means, as applicable, the [Territory](/usc/48/2104.md?p=20) Government Issuer or an Authorized [Territorial Instrumentality](/usc/48/2104.md?p=19-A) that has issued or guaranteed at least one [Bond](/usc/48/2104.md?p=2) that is Outstanding.
  - (9) **Modification—** The term “Modification” means any modification, amendment, supplement or waiver affecting one or more series of [Bonds](/usc/48/2104.md?p=2), including those effected by way of exchange, repurchase, conversion, or substitution.
  - (10) **Outstanding—** The term “Outstanding,” in the context of the principal amount of [Bonds](/usc/48/2104.md?p=2), shall be determined in accordance with [subsection (b)](#b).
  - (11) **Outstanding Principal—** The term “Outstanding Principal” means—
    - (A) for a [Bond](/usc/48/2104.md?p=2) that is not a Capital Appreciation [Bond](/usc/48/2104.md?p=2) or a Convertible Capital Appreciation [Bond](/usc/48/2104.md?p=2), the outstanding principal amount of such [Bond](/usc/48/2104.md?p=2); and
    - (B) for a [Bond](/usc/48/2104.md?p=2) that is a Capital Appreciation [Bond](/usc/48/2104.md?p=2) or a Convertible Capital Appreciation [Bond](/usc/48/2104.md?p=2), the current accreted value of such Capital Appreciation [Bond](/usc/48/2104.md?p=2) or a Convertible Capital Appreciation [Bond](/usc/48/2104.md?p=2), as applicable.
  - (12) **Pool—** The term “Pool” means a pool established in accordance with [subsection (d)](#d).
  - (13) **Qualifying Modification—** The term “Qualifying Modification” means a Modification proposed in accordance with [subsection (g)](#g).
  - (14) **Secured Pool—** The term “Secured Pool” means a Pool established in accordance with [subsection (d)](#d) consisting only of [Bonds](/usc/48/2104.md?p=2) that are secured by a lien on property, provided that the inclusion of a [Bond Claim](/usc/48/2104.md?p=3) in such Pool shall not in any way limit or prejudice the right of the Issuer, the Administrative Supervisor, or any creditor to recharacterize or challenge such [Bond Claim](/usc/48/2104.md?p=3), or any purported lien securing such [Bond Claim](/usc/48/2104.md?p=3), in any other manner in any subsequent proceeding in the event a proposed Qualifying Modification is not consummated.
  - (15) **Territory Government Issuer—** The term “[Territory](/usc/48/2104.md?p=20) Government Issuer” means the [Government of Puerto Rico](/usc/48/2104.md?p=11) or such [covered territory](/usc/48/2104.md?p=8) for which an [Oversight Board](/usc/48/2104.md?p=17) has been established pursuant to [section 2121 of this title](/usc/48/2121.md).
- (b) **Outstanding Bonds—** In determining whether holders of the requisite principal amount of Outstanding [Bonds](/usc/48/2104.md?p=2) have voted in favor of, or consented to, a proposed Qualifying Modification, a [Bond](/usc/48/2104.md?p=2) will be deemed not to be outstanding, and may not be counted in a vote or consent solicitation for or against a proposed Qualifying Modification, if on the record date for the proposed Qualifying Modification—
  - (1) the [Bond](/usc/48/2104.md?p=2) has previously been cancelled or delivered for cancellation or is held for reissuance but has not been reissued;
  - (2) the [Bond](/usc/48/2104.md?p=2) has previously been called for redemption in accordance with its terms or previously become due and payable at maturity or otherwise and the Issuer has previously satisfied its obligation to make, or provide for, all payments due in respect of the [Bond](/usc/48/2104.md?p=2) in accordance with its terms;
  - (3) the [Bond](/usc/48/2104.md?p=2) has been substituted with a security of another series; or
  - (4) the [Bond](/usc/48/2104.md?p=2) is held by the Issuer or by an Authorized [Territorial Instrumentality](/usc/48/2104.md?p=19-A) of the [Territory](/usc/48/2104.md?p=20) Government Issuer or by a corporation, trust or other legal entity that is controlled by the Issuer or an Authorized [Territorial Instrumentality](/usc/48/2104.md?p=19-A) of the [Territory](/usc/48/2104.md?p=20) Government Issuer, as applicable.

  For purposes of this subsection, a corporation, trust or other legal entity is controlled by the Issuer or by an Authorized [Territorial Instrumentality](/usc/48/2104.md?p=19-A) of the [Territory](/usc/48/2104.md?p=20) Government Issuer if the Issuer or an Authorized [Territorial Instrumentality](/usc/48/2104.md?p=19-A) of the [Territory](/usc/48/2104.md?p=20) Government Issuer, as applicable, has the power, directly or indirectly, through the ownership of voting securities or other ownership interests, by contract or otherwise, to direct the management of or elect or appoint a majority of the board of directors or other persons performing similar functions in lieu of, or in addition to, the board of directors of that legal entity.

- (c) **Certification of disenfranchised Bonds—** Prior to any vote on, or consent solicitation for, a Qualifying Modification, the Issuer shall deliver to the Calculation Agent a certificate signed by an authorized representative of the Issuer specifying any [Bonds](/usc/48/2104.md?p=2) that are deemed not to be Outstanding for the purpose of [subsection (b)](#b) above.
- (d) **Determination of Pools for voting—** The Administrative Supervisor, in consultation with the Issuer, shall establish Pools in accordance with the following:
  - (1) Not less than one Pool shall be established for each Issuer.
  - (2) A Pool that contains one or more [Bonds](/usc/48/2104.md?p=2) that are secured by a lien on property shall be a Secured Pool.
  - (3) The Administrative Supervisor shall establish Pools according to the following principles:
    - (A) For each Issuer that has issued multiple [Bonds](/usc/48/2104.md?p=2) that are distinguished by specific provisions governing priority or security arrangements, including [Bonds](/usc/48/2104.md?p=2) that have been issued as general obligations of the [Territory](/usc/48/2104.md?p=20) Government Issuer to which the [Territory](/usc/48/2104.md?p=20) Government Issuer pledged the full or good faith, credit, and taxing power of the [Territory](/usc/48/2104.md?p=20) Government Issuer, separate Pools shall be established corresponding to the relative priority or security arrangements of each holder of [Bonds](/usc/48/2104.md?p=2) against each Issuer, as applicable, provided, however, that the term “priority” as used in this section shall not be understood to mean differing payment or maturity dates.
    - (B) For each Issuer that has issued senior and subordinated [Bonds](/usc/48/2104.md?p=2), separate Pools shall be established for the senior and subordinated [Bonds](/usc/48/2104.md?p=2) corresponding to the relative priority or security arrangements.
    - (C) For each Issuer that has issued multiple [Bonds](/usc/48/2104.md?p=2), for at least some of which a guarantee of repayment has been provided by the [Territory](/usc/48/2104.md?p=20) Government Issuer, separate Pools shall be established for such guaranteed and non-guaranteed [Bonds](/usc/48/2104.md?p=2).
    - (D) Subject to the other requirements contained in this section, for each Issuer that has issued multiple [Bonds](/usc/48/2104.md?p=2), for at least some of which a dedicated revenue stream has been pledged for repayment, separate Pools for such Issuer shall be established as follows—
      - (i) for each dedicated revenue stream that has been pledged for repayment, not less than one Secured Pool for [Bonds](/usc/48/2104.md?p=2) for which such revenue stream has been pledged, and separate Secured Pools shall be established for [Bonds](/usc/48/2104.md?p=2) of different priority; and
      - (ii) not less than one Pool for all other [Bonds](/usc/48/2104.md?p=2) issued by the Issuer for which a dedicated revenue stream has not been pledged for repayment.
    - (E) The Administrative Supervisor shall not place into separate Pools [Bonds](/usc/48/2104.md?p=2) of the same Issuer that have identical rights in security or priority.
  - (4) Notwithstanding the preceding provisions of this subsection, solely with respect to a preexisting voluntary agreement as described in [section 2124(i)(3) of this title](/usc/48/2124.md?p=i-3), such voluntary agreement may classify [Insured Bonds](/usc/48/2161.md?p=c-4) and uninsured bonds in different Pools and provide different treatment thereof so long as the preexisting voluntary agreement has been agreed to by—
    - (A) holders of a majority in amount of all uninsured bonds outstanding in the modified Pool; and
    - (B) holders (including insurers with power to vote) of a majority in amount of all [Insured Bonds](/usc/48/2161.md?p=c-4).
- (e) **Authorization of Territory Instrumentalities—** A [covered territorial instrumentality](/usc/48/2104.md?p=7) is an Authorized [Territorial Instrumentality](/usc/48/2104.md?p=19-A) if it has been specifically authorized to be eligible to avail itself of the procedures under this section by the Administrative Supervisor.
- (f) **Information delivery requirement—** Before solicitation of acceptance or rejection of a Modification under [subsection (h)](#h), the Issuer shall provide to the Calculation Agent, the Information Agent, and the Administrative Supervisor, the following information—
  - (1) a description of the Issuer’s economic and financial circumstances which are, in the Issuer’s opinion, relevant to the request for the proposed Qualifying Modification, a description of the Issuer’s existing debts, a description of the impact of the proposed Qualifying Modification on the [territory](/usc/48/2104.md?p=20)’s or its [territorial instrumentalities](/usc/48/2104.md?p=19-A)’ public debt;
  - (2) if the Issuer is seeking Modifications affecting any other Pools of [Bonds](/usc/48/2104.md?p=2) of the [Territory](/usc/48/2104.md?p=20) Government Issuer or its Authorized [Territorial Instrumentalities](/usc/48/2104.md?p=19-A), a description of such other Modifications;
  - (3) if a [Fiscal Plan](/usc/48/2104.md?p=10) with respect to such Issuer has been certified, the applicable [Fiscal Plan](/usc/48/2104.md?p=10) certified in accordance with [section 2141 of this title](/usc/48/2141.md); and
  - (4) such other information as may be required under applicable securities laws.
- (g) **Qualifying Modification—** A Modification is a Qualifying Modification if one of the following processes has occurred:
  - (1) **Consultation process—**
    - (A) the Issuer proposing the Modification has consulted with holders of [Bonds](/usc/48/2104.md?p=2) in each Pool of such Issuer prior to soliciting a vote on such Modification;
    - (B) each exchanging, repurchasing, converting, or substituting holder of [Bonds](/usc/48/2104.md?p=2) of any series in a Pool affected by that Modification is offered the same amount of consideration per amount of principal, the same amount of consideration per amount of interest accrued but unpaid and the same amount of consideration per amount of past due interest, respectively, as that offered to each other exchanging, repurchasing, converting, or substituting holder of [Bonds](/usc/48/2104.md?p=2) of any series in a Pool affected by that Modification (or, where a menu of instruments or other consideration is offered, each exchanging, repurchasing, converting, or substituting holder of [Bonds](/usc/48/2104.md?p=2) of any series in a Pool affected by that Modification is offered the same amount of consideration per amount of principal, the same amount of consideration per amount of interest accrued but unpaid and the same amount of consideration per amount of past due interest, respectively, as that offered to each other exchanging, repurchasing, converting, or substituting holder of [Bonds](/usc/48/2104.md?p=2) of any series in a Pool affected by that Modification electing the same option under such menu of instruments); and
    - (C) the Modification is certified by the Administrative Supervisor as being consistent with the requirements set forth in [section 2124(i)(1) of this title](/usc/48/2124.md?p=i-1) and is in the best interests of the creditors and is feasible.
  - (2) **Voluntary agreement process—** The Administrative Supervisor has issued a certification that—
    - (A) the requirements set forth in [section 2124(i)(2) of this title](/usc/48/2124.md?p=i-2) and [subsection (g)(1)(B)](#g-1-B) have been satisfied; or
    - (B) the Modification is consistent with a restructuring support or similar agreement to be implemented pursuant to the law of the [covered territory](/usc/48/2104.md?p=8) executed by the Issuer prior to the establishment of an [Oversight Board](/usc/48/2104.md?p=17) for the relevant [territory](/usc/48/2104.md?p=20).
- (h) **Solicitation—**
  - (1) Upon receipt of a certification from the Administrative Supervisor under [subsection (g)](#g), the Information Agent shall, if practical and except as provided in [paragraph (2)](#h-2), submit to the holders of any Outstanding [Bonds](/usc/48/2104.md?p=2) of the relevant Issuer, including holders of the right to vote such Outstanding [Bonds](/usc/48/2104.md?p=2), the information submitted by the relevant Issuer under [subsection (f)(1)](#f-1) in order to solicit the vote of such holders to approve or reject the Qualifying Modification.
  - (2) If the Information Agent is unable to identify the address of holders of any Outstanding [Bonds](/usc/48/2104.md?p=2) of the relevant Issuer, the Information Agent may solicit the vote or consent of such holders by—
    - (A) delivering the solicitation to the paying agent for any such Issuer or Depository Trust Corporation if it serves as the clearing system for any of the Issuer’s Outstanding [Bonds](/usc/48/2104.md?p=2); or
    - (B) delivering or publishing the solicitation by whatever additional means the Information Agent, after consultation with the Issuer, deems necessary and appropriate in order to make a reasonable effort to inform holders of any Outstanding [Bonds](/usc/48/2104.md?p=2) of the Issuer which may include, notice by mail, publication in electronic media, publication on a website of the Issuer, or publication in newspapers of national circulation in the United States and in a newspaper of general circulation in the [territory](/usc/48/2104.md?p=20).
- (i) **Who may propose a Modification—** For each Issuer, a Modification may be proposed to the Administrative Supervisor by the Issuer or by one or more holders of the right to vote the Issuer’s Outstanding [Bonds](/usc/48/2104.md?p=2). To the extent a Modification proposed by one or more holders of the right to vote Outstanding [Bonds](/usc/48/2104.md?p=2) otherwise complies with the requirements of this subchapter, the Administrative Supervisor may accept such Modification on behalf of the Issuer, in which case the Administrative Supervisor will instruct the Issuer to provide the information required in [subsection (f)](#f).
- (j) **Voting—** For each Issuer, any Qualifying Modification may be made with the affirmative vote of the holders of the right to vote at least two-thirds of the Outstanding Principal amount of the Outstanding [Bonds](/usc/48/2104.md?p=2) in each Pool that have voted to approve or reject the Qualifying Modification, provided that holders of the right to vote not less than a majority of the aggregate Outstanding Principal amount of all the Outstanding [Bonds](/usc/48/2104.md?p=2) in each Pool have voted to approve the Qualifying Modification. The holder of the right to vote the Outstanding [Bonds](/usc/48/2104.md?p=2) that are [Insured Bonds](/usc/48/2161.md?p=c-4) shall be the monoline insurer insuring such [Insured Bond](/usc/48/2161.md?p=c-4) to the extent such insurer is granted the right to vote [Insured Bonds](/usc/48/2161.md?p=c-4) for purposes of directing remedies or consenting to proposed amendments or modifications as provided in the applicable documents pursuant to which such [Insured Bond](/usc/48/2161.md?p=c-4) was issued and insured.
- (k) **Calculation Agent—** For the purpose of calculating the principal amount of the [Bonds](/usc/48/2104.md?p=2) of any series eligible to participate in such a vote or consent solicitation and tabulating such votes or consents, the [Territory](/usc/48/2104.md?p=20) Government Issuer may appoint a Calculation Agent for each Pool reasonably acceptable to the Administrative Supervisor.
- (l) **Information Agent—** For the purpose of administering a vote of holders of [Bonds](/usc/48/2104.md?p=2), including the holders of the right to vote such [Bonds](/usc/48/2104.md?p=2), or seeking the consent of holder[^1] of [Bonds](/usc/48/2104.md?p=2), including the holders of the right to vote such [Bonds](/usc/48/2104.md?p=2), to a written action under this section, the [Territory](/usc/48/2104.md?p=20) Government Issuer may appoint an Information Agent for each Pool reasonably acceptable to the Administrative Supervisor.
- (m) **Binding effect—**
  - (1) A Qualifying Modification will be conclusive and binding on all holders of [Bonds](/usc/48/2104.md?p=2) whether or not they have given such consent, and on all future holders of those [Bonds](/usc/48/2104.md?p=2) whether or not notation of such Qualifying Modification is made upon the [Bonds](/usc/48/2104.md?p=2), if—
    - (A) the holders of the right to vote the Outstanding [Bonds](/usc/48/2104.md?p=2) in every Pool of the Issuer pursuant to [subsection (j)](#j) have consented to or approved the Qualifying Modification;
    - (B) the Administrative Supervisor certifies that—
      - (i) the voting requirements of this section have been satisfied;
      - (ii) the Qualifying Modification complies with the requirements set forth in [section 2124(i)(1) of this title](/usc/48/2124.md?p=i-1); and
      - (iii) except for such conditions that have been identified in the Qualifying Modification as being non-waivable, any conditions on the effectiveness of the Qualifying Modification have been satisfied or, in the Administrative Supervisor’s sole discretion, satisfaction of such conditions has been waived;
    - (C) with respect to a [Bond Claim](/usc/48/2104.md?p=3) that is secured by a lien on property and with respect to which the holder of such [Bond Claim](/usc/48/2104.md?p=3) has rejected or not consented to the Qualifying Modification, the holder of such [Bond](/usc/48/2104.md?p=2)—
      - (i) retains the lien securing such [Bond Claims](/usc/48/2104.md?p=3); or
      - (ii) receives on account of such [Bond Claim](/usc/48/2104.md?p=3), through deferred cash payments, substitute collateral, or otherwise, at least the equivalent value of the lesser of the amount of the [Bond Claim](/usc/48/2104.md?p=3) or of the collateral securing such [Bond Claim](/usc/48/2104.md?p=3); and
    - (D) the district court for the [territory](/usc/48/2104.md?p=20) or, for any [territory](/usc/48/2104.md?p=20) that does not have a district court, the United States District Court for the District of Hawaii, has, after reviewing an application submitted to it by the applicable Issuer for an order approving the Qualifying Modification, entered an order that the requirements of this section have been satisfied.
  - (2) Upon the entry of an order under [paragraph (1)(D)](#m-1-D), the conclusive and binding Qualifying Modification shall be valid and binding on any person or entity asserting claims or other rights, including a beneficial interest (directly or indirectly, as principal, agent, counterpart, subrogee, insurer or otherwise) in respect of [Bonds](/usc/48/2104.md?p=2) subject to the Qualifying Modification, any [trustee](/usc/48/2161.md?p=c-7), any collateral agent, any indenture [trustee](/usc/48/2161.md?p=c-7), any fiscal agent, and any bank that receives or holds funds related to such [Bonds](/usc/48/2104.md?p=2). All property of an Issuer for which an order has been entered under [paragraph (1)(D)](#m-1-D) shall vest in the Issuer free and clear of all claims in respect of any [Bonds](/usc/48/2104.md?p=2) of any other Issuer. Such Qualifying Modification will be full, final, complete, binding, and conclusive as to the [territorial government](/usc/48/2104.md?p=18) Issuer, other [territorial instrumentalities](/usc/48/2104.md?p=19-A) of the [territorial government](/usc/48/2104.md?p=18) Issuer, and any creditors of such entities, and should not be subject to any collateral attack or other challenge by any such entities in any court or other forum. Other than as provided herein, the foregoing shall not prejudice the rights and claims of any party that insured the [Bonds](/usc/48/2104.md?p=2), including the right to assert claims under the [Bonds](/usc/48/2104.md?p=2) as modified following any payment under the insurance policy, and no claim or right that may be asserted by any party in a capacity other than holder of a [Bond](/usc/48/2104.md?p=2) affected by the Qualifying Modification shall be satisfied, released, discharged, or enjoined by this provision.
- (n) **Judicial review—**
  - (1) The district court for the [territory](/usc/48/2104.md?p=20) or, for any [territory](/usc/48/2104.md?p=20) that does not have a district court, the United States District Court for the District of Hawaii shall have original and exclusive jurisdiction over civil actions arising under this section.
  - (2) Notwithstanding [section 2126(e) of this title](/usc/48/2126.md?p=e), there shall be a cause of action to challenge unlawful application of this section.
  - (3) The district court shall nullify a Modification and any effects on the rights of the holders of [Bonds](/usc/48/2104.md?p=2) resulting from such Modification if and only if the district court determines that such Modification is manifestly inconsistent with this section.

## Footnotes

[^1]: So in original. Probably should be “holders”.

## Source credit

(Pub. L. 114–187, title VI, § 601, June 30, 2016, 130 Stat. 603.)