48 U.S.C. § 2231 — Creditor collective action

Page 384 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2215 authorization issued for a Critical Project any term or condition that may be permitted, but is not required, by any applicable Puerto Rico law, if the Revitalization Coordinator determines the term or condition would prevent or impair the expeditious construction, operation, or expan- sion of the Critical Project. The Revitalization Coordinator may request a Puerto Rico Agency to include in any certificate, right-of-way, per- mit, lease, or other authorization, a term or condition that may be permitted in accordance with applicable laws if the Revitalization Coor- dinator determines such inclusion would support the expeditious construction, operation, or ex- pansion of any Critical Project. (f) Disclosure All Critical Project reports, and justifications for approval or rejection of Critical Project sta- tus, shall be made publicly available online within 5 days of receipt or completion. (Pub. L. 114–187, title V, § 504, June 30, 2016, 130 Stat. 601.) § 2215. Federal agency requirements (a) Federal Points of Contact At the request of the Revitalization Coordi- nator and within 30 days of receiving such a re- quest, each Federal agency with jurisdiction over the permitting, or administrative or envi- ronmental review of private or public projects in Puerto Rico, shall name a Point of Contact who will serve as that agency’s liaison with the Revi- talization Coordinator. (b) Federal grants and loans For each Critical Project with a pending or po- tential Federal grant, loan, or loan guarantee application, the Revitalization Coordinator and the relevant Point of Contact shall cooperate with each other to ensure expeditious review of such application. (c) Expedited reviews and actions of Federal agencies All reviews conducted and actions taken by any Federal agency relating to a Critical Project shall be expedited in a manner con- sistent with completion of the necessary reviews and approvals by the deadlines under the Expe- dited Permitting Process, but in no way shall the deadlines established through the Expedited Permitting Process be binding on any Federal agency. (Pub. L. 114–187, title V, § 505, June 30, 2016, 130 Stat. 602.) Editorial Notes CODIFICATION Section is comprised of section 505 of Pub. L. 114–187. Subsec. (d) of section 505 of Pub. L. 114–187 amended section 1492a of this title. § 2216. Judicial review (a) Deadline for filing of a claim A claim arising under this subchapter must be brought no later than 30 days after the date of the decision or action giving rise to the claim. (b) Expedited consideration The District Court for the District of Puerto Rico shall set any action brought under this subchapter for expedited consideration, taking into account the interest of enhancing Puerto Rico’s infrastructure for electricity, water and sewer services, roads and bridges, ports, and solid waste management to achieve compliance with local and Federal environmental laws, reg- ulations, and policies while ensuring the con- tinuity of adequate services to the people of Puerto Rico and Puerto Rico’s sustainable eco- nomic development. (Pub. L. 114–187, title V, § 506, June 30, 2016, 130 Stat. 602.) § 2217. Savings clause Nothing in this subchapter is intended to change or alter any Federal legal requirements or laws. (Pub. L. 114–187, title V, § 507, June 30, 2016, 130 Stat. 603.) 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 established under section 2121 of this title. (2) Authorized Territorial Instrumentality The term ‘‘Authorized Territorial Instru- mentality’’ means a covered territorial instru- mentality authorized in accordance with sub- section (e). (3) Calculation Agent The term ‘‘Calculation Agent’’ means a cal- culation agent appointed in accordance with subsection (k). (4) Capital Appreciation Bond The term ‘‘Capital Appreciation Bond’’ means a Bond 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, including that the accreted interest amount added to principal increases daily. (5) Convertible Capital Appreciation Bond The term ‘‘Convertible Capital Appreciation Bond’’ means a Bond that does not pay inter- est 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 on a future date. (6) Information Agent The term ‘‘Information Agent’’ means an in- formation agent appointed in accordance with subsection (l). (7) Insured Bond The term ‘‘Insured Bond’’ means a bond sub- ject to a financial guarantee or similar insur- ance contract, policy or surety issued by a monoline insurer. (8) Issuer The term ‘‘Issuer’’ means, as applicable, the Territory Government Issuer or an Authorized Page 385 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2231 Territorial Instrumentality that has issued or guaranteed at least one Bond that is Out- standing. (9) Modification The term ‘‘Modification’’ means any modi- fication, amendment, supplement or waiver af- fecting one or more series of Bonds, 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, shall be deter- mined in accordance with subsection (b). (11) Outstanding Principal The term ‘‘Outstanding Principal’’ means— (A) for a Bond that is not a Capital Appre- ciation Bond or a Convertible Capital Appre- ciation Bond, the outstanding principal amount of such Bond; and (B) for a Bond that is a Capital Apprecia- tion Bond or a Convertible Capital Apprecia- tion Bond, the current accreted value of such Capital Appreciation Bond or a Con- vertible Capital Appreciation Bond, as appli- cable. (12) Pool The term ‘‘Pool’’ means a pool established in accordance with subsection (d). (13) Qualifying Modification The term ‘‘Qualifying Modification’’ means a Modification proposed in accordance with subsection (g). (14) Secured Pool The term ‘‘Secured Pool’’ means a Pool es- tablished in accordance with subsection (d) consisting only of Bonds that are secured by a lien on property, provided that the inclusion of a Bond Claim 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, or any purported lien securing such Bond Claim, in any other manner in any sub- sequent proceeding in the event a proposed Qualifying Modification is not consummated. (15) Territory Government Issuer The term ‘‘Territory Government Issuer’’ means the Government of Puerto Rico or such covered territory for which an Oversight Board has been established pursuant to section 2121 of this title. (b) Outstanding Bonds In determining whether holders of the req- uisite principal amount of Outstanding Bonds have voted in favor of, or consented to, a pro- posed Qualifying Modification, a Bond 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 has previously been cancelled or delivered for cancellation or is held for reissuance but has not been reissued; (2) the Bond has previously been called for redemption in accordance with its terms or previously become due and payable at matu- rity or otherwise and the Issuer has previously satisfied its obligation to make, or provide for, all payments due in respect of the Bond in ac- cordance with its terms; (3) the Bond has been substituted with a se- curity of another series; or (4) the Bond is held by the Issuer or by an Authorized Territorial Instrumentality of the Territory Government Issuer or by a corpora- tion, trust or other legal entity that is con- trolled by the Issuer or an Authorized Terri- torial Instrumentality of the Territory Gov- ernment 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 Instru- mentality of the Territory Government Issuer if the Issuer or an Authorized Territorial Instru- mentality of the Territory Government Issuer, as applicable, has the power, directly or indi- rectly, through the ownership of voting securi- ties 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 that are deemed not to be Outstanding for the purpose of subsection (b) above. (d) Determination of Pools for voting The Administrative Supervisor, in consulta- tion with the Issuer, shall establish Pools in ac- cordance with the following: (1) Not less than one Pool shall be estab- lished for each Issuer. (2) A Pool that contains one or more Bonds that are secured by a lien on property shall be a Secured Pool. (3) The Administrative Supervisor shall es- tablish Pools according to the following prin- ciples: (A) For each Issuer that has issued mul- tiple Bonds that are distinguished by spe- cific provisions governing priority or secu- rity arrangements, including Bonds that have been issued as general obligations of the Territory Government Issuer to which the Territory Government Issuer pledged the full or good faith, credit, and taxing power of the Territory Government Issuer, sepa- rate Pools shall be established corresponding to the relative priority or security arrange- ments of each holder of Bonds 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, separate Pools shall be established for the senior and subordi- nated Bonds corresponding to the relative priority or security arrangements. Page 386 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2231 (C) For each Issuer that has issued mul- tiple Bonds, for at least some of which a guarantee of repayment has been provided by the Territory Government Issuer, sepa- rate Pools shall be established for such guar- anteed and non-guaranteed Bonds. (D) Subject to the other requirements con- tained in this section, for each Issuer that has issued multiple Bonds, for at least some of which a dedicated revenue stream has been pledged for repayment, separate Pools for such Issuer shall be established as fol- lows— (i) for each dedicated revenue stream that has been pledged for repayment, not less than one Secured Pool for Bonds for which such revenue stream has been pledged, and separate Secured Pools shall be established for Bonds of different pri- ority; and (ii) not less than one Pool for all other Bonds 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 of the same Issuer that have identical rights in se- curity or priority. (4) Notwithstanding the preceding provisions of this subsection, solely with respect to a pre- existing voluntary agreement as described in section 2124(i)(3) of this title, such voluntary agreement may classify Insured Bonds and un- insured bonds in different Pools and provide different treatment thereof so long as the pre- existing 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 In- sured Bonds. (e) Authorization of Territory Instrumentalities A covered territorial instrumentality is an Authorized Territorial Instrumentality 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), 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 de- scription of the Issuer’s existing debts, a de- scription of the impact of the proposed Quali- fying Modification on the territory’s or its territorial instrumentalities’ public debt; (2) if the Issuer is seeking Modifications af- fecting any other Pools of Bonds of the Terri- tory Government Issuer or its Authorized Ter- ritorial Instrumentalities, a description of such other Modifications; (3) if a Fiscal Plan with respect to such Issuer has been certified, the applicable Fiscal Plan certified in accordance with section 2141 of this title; and (4) such other information as may be re- quired 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 in each Pool of such Issuer prior to soliciting a vote on such Modification; (B) each exchanging, repurchasing, con- verting, or substituting holder of Bonds 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 consider- ation per amount of past due interest, respec- tively, as that offered to each other exchang- ing, repurchasing, converting, or substituting holder of Bonds of any series in a Pool affected by that Modification (or, where a menu of in- struments or other consideration is offered, each exchanging, repurchasing, converting, or substituting holder of Bonds 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 of- fered to each other exchanging, repurchasing, converting, or substituting holder of Bonds of any series in a Pool affected by that Modifica- tion electing the same option under such menu of instruments); and (C) the Modification is certified by the Ad- ministrative Supervisor as being consistent with the requirements set forth in section 2124(i)(1) of this title and is in the best inter- ests 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 and subsection (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 executed by the Issuer prior to the establishment of an Oversight Board for the relevant territory. (h) Solicitation (1) Upon receipt of a certification from the Ad- ministrative Supervisor under subsection (g), the Information Agent shall, if practical and ex- cept as provided in paragraph (2), submit to the holders of any Outstanding Bonds of the rel- evant Issuer, including holders of the right to vote such Outstanding Bonds, the information submitted by the relevant Issuer under sub- section (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 iden- tify the address of holders of any Outstanding Page 387 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2231 1 So in original. Probably should be ‘‘holders’’. Bonds 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; 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 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 na- tional circulation in the United States and in a newspaper of general circulation in the terri- tory. (i) Who may propose a Modification For each Issuer, a Modification may be pro- posed to the Administrative Supervisor by the Issuer or by one or more holders of the right to vote the Issuer’s Outstanding Bonds. To the ex- tent a Modification proposed by one or more holders of the right to vote Outstanding Bonds 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 Super- visor will instruct the Issuer to provide the in- formation required in subsection (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 Out- standing Bonds 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 Out- standing Principal amount of all the Out- standing Bonds in each Pool have voted to ap- prove the Qualifying Modification. The holder of the right to vote the Outstanding Bonds that are Insured Bonds shall be the monoline insurer in- suring such Insured Bond to the extent such in- surer is granted the right to vote Insured Bonds for purposes of directing remedies or consenting to proposed amendments or modifications as provided in the applicable documents pursuant to which such Insured Bond was issued and in- sured. (k) Calculation Agent For the purpose of calculating the principal amount of the Bonds of any series eligible to participate in such a vote or consent solicita- tion and tabulating such votes or consents, the Territory Government Issuer may appoint a Cal- culation Agent for each Pool reasonably accept- able to the Administrative Supervisor. (l) Information Agent For the purpose of administering a vote of holders of Bonds, including the holders of the right to vote such Bonds, or seeking the consent of holder 1 of Bonds, including the holders of the right to vote such Bonds, to a written action under this section, the Territory Government Issuer may appoint an Information Agent for each Pool reasonably acceptable to the Adminis- trative Supervisor. (m) Binding effect (1) A Qualifying Modification will be conclu- sive and binding on all holders of Bonds whether or not they have given such consent, and on all future holders of those Bonds whether or not no- tation of such Qualifying Modification is made upon the Bonds, if— (A) the holders of the right to vote the Out- standing Bonds in every Pool of the Issuer pur- suant to subsection (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; and (iii) except for such conditions that have been identified in the Qualifying Modifica- tion as being non-waivable, any conditions on the effectiveness of the Qualifying Modi- fication have been satisfied or, in the Ad- ministrative Supervisor’s sole discretion, satisfaction of such conditions has been waived; (C) with respect to a Bond Claim that is se- cured by a lien on property and with respect to which the holder of such Bond Claim has re- jected or not consented to the Qualifying Modification, the holder of such Bond— (i) retains the lien securing such Bond Claims; or (ii) receives on account of such Bond Claim, through deferred cash payments, sub- stitute collateral, or otherwise, at least the equivalent value of the lesser of the amount of the Bond Claim or of the collateral secur- ing such Bond Claim; and (D) the district court for the territory or, for any territory that does not have a district court, the United States District Court for the District of Hawaii, has, after reviewing an ap- plication submitted to it by the applicable Issuer for an order approving the Qualifying Modification, entered an order that the re- quirements of this section have been satisfied. (2) Upon the entry of an order under paragraph (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 subject to the Qualifying Modification, any trustee, any collateral agent, any indenture trustee, any fiscal agent, and any bank that re- ceives or holds funds related to such Bonds. All property of an Issuer for which an order has been entered under paragraph (1)(D) shall vest in the Issuer free and clear of all claims in respect of any Bonds of any other Issuer. Such Quali- fying Modification will be full, final, complete, binding, and conclusive as to the territorial gov- Page 388 TITLE 48—TERRITORIES AND INSULAR POSSESSIONS § 2232 ernment Issuer, other territorial instrumental- ities of the territorial government Issuer, and any creditors of such entities, and should not be subject to any collateral attack or other chal- lenge by any such entities in any court or other forum. Other than as provided herein, the fore- going shall not prejudice the rights and claims of any party that insured the Bonds, including the right to assert claims under the Bonds as modified following any payment under the in- surance policy, and no claim or right that may be asserted by any party in a capacity other than holder of a Bond affected by the Qualifying Modification shall be satisfied, released, dis- charged, or enjoined by this provision. (n) Judicial review (1) The district court for the territory or, for any territory that does not have a district court, the United States District Court for the District of Hawaii shall have original and exclu- sive jurisdiction over civil actions arising under this section. (2) Notwithstanding section 2126(e) of this title, there shall be a cause of action to chal- lenge unlawful application of this section. (3) The district court shall nullify a Modifica- tion and any effects on the rights of the holders of Bonds resulting from such Modification if and only if the district court determines that such Modification is manifestly inconsistent with this section. (Pub. L. 114–187, title VI, § 601, June 30, 2016, 130 Stat. 603.) § 2232. Applicable law In any judicial proceeding regarding this sub- chapter, Federal, State, or territorial laws of the United States, as applicable, shall govern and be applied without regard or reference to any law of any international or foreign jurisdic- tion. (Pub. L. 114–187, title VI, § 602, June 30, 2016, 130 Stat. 609.) SUBCHAPTER VII—SENSE OF CONGRESS REGARDING PERMANENT, PRO-GROWTH FISCAL REFORMS § 2241. Sense of Congress regarding permanent, pro-growth fiscal reforms It is the sense of the Congress that any dura- ble solution for Puerto Rico’s fiscal and eco- nomic crisis should include permanent, pro- growth fiscal reforms that feature, among other elements, a free flow of capital between posses- sions of the United States and the rest of the United States. (Pub. L. 114–187, title VII, § 701, June 30, 2016, 130 Stat. 610.)