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The Fiscal Oversight Committee (JSF) called on the administration and the legislature to amend or repeal the law that created a mitigation plan for cooperatives to compensate the industry for losses of about $400 million on Puerto Rico bonds.
In a letter to Omar J. Marrero, Executive Director of the Administration of Financial Advising and Fiscal Institutions (AAFAF), the board’s Executive Director Robert F. Mujica, Jr., listed the reasons why the federal entity voiced your opposition to Law No. 99.
Mujica recalled that on January 18, 2022, the United States District Court for Puerto Rico confirmed the federal plan of adjustment (the “Adjustment Plan”), which reduced Puerto Rico’s debt by approximately 80% and provided for the treatment and rights of Puerto Rican claimants. “Providing relief or compensation to cooperatives beyond the treatment provided for in the Adjustment Plan violates the Confirmation Order because the Adjustment Plan fully resolves the debt obligations of these entities,” the letter reads.
The law, originally Senate Item 644, was vetoed by Governor Pedro Pierluisi following complaints from the Commission, AAFAF, and the Office of Budget and Management (OPG). However, the Legislature overrode the veto.
On July 19, 2024, the Board received a representation from the Governor pursuant to Section 204(a) of PROMESA Law No. 99. The representation included a statement from OPG certifying that Law No. 99 is materially incompatible with the Federal Fiscal Program and the Cooperative Public Supervision and Insurance Corporation (COSSEC) Program.
“The Supervisory Board agrees with this assessment. Please note that the Supervisory Board adopted a resolution on August 16, 2024, which determined that Law No. 99 undermines or frustrates the purpose of PROMESA,” Mujica said.
“The Oversight Committee orders the government to amend or repeal Law No. 99 to eliminate the aforementioned inconsistencies or to provide an explanation for the inconsistencies by August 30, 2024,” the letter added.
The board’s executive director concluded by saying that they reserve the right to take any measures they deem necessary, “including seeking resources to prevent the implementation and enforcement of Law No. 99 and to repeal the law.”
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