Issue link: https://mbozikis.ufcontent.com/i/1422521
237 Stability Act 134 ("PROMESA"), which is a statute that allows U.S. territories 135 and their instrumentalities to reorganize their debts. Prior to the passing of this statute, the Commonwealth of Puerto Rico would not have been eligible to reorganize its debts under Chapter 9 of the Bankruptcy Code because of its status as a U.S. territory. 11 U.S.C. § 101(52). PROMESA created a path for these territories to restructure their debts through a process that incorporates some elements of Chapter 9 and Chapter 11 of the Bankruptcy Code. For example, Section 405 of PROMESA borrows a tool present in Section 362 of the Bankruptcy Code, the automatic stay 136 , but deviates from the procedures present in the Bankruptcy Code in other ways. PROMESA allows distressed territories to seek relief from creditors using either of the paths set forth in Title III 137 or Title VI 138 of the statute. Title III of PROMESA provides debtor- territories the opportunity to restructure through an in-court restructuring process similar to the process set forth in Chapter 9 of the Bankruptcy Code. In May and June of 2017, the Commonwealth of Puerto Rico and three of its instrumentalities 139 filed petitions for relief under Title III of PROMESA. On the other hand, Title VI sets forth an out-of-court restructuring process that relies on a creditor-focused, collective action approach to facilitate an open dialog between the debtor-territory and its creditors. 132 As discussed further herein, the territory of Puerto Rico was encumbered with approximately $74 billion in public debt and an additional $49 billion in pension obligations at the time of the Title III filings. 133 PROMESA went into effect on June 30, 2016. 134 48 U.S.C. §§ 2101 – 2241. 135 Specifically, a "territory" under PROMESA refers to the Commonwealth of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands or the U.S. Virgin Islands. 48 U.S.C. § 2104(20). 136 48 U.S.C. § 2194. 137 48 U.S.C. §§ 2161 – 2177. 138 48 U.S.C. §§ 2231 – 2232. 139 In May 2017, the Commonwealth of Puerto Rico and the Puerto Rico Sales Tax Financing Corporation filed petitions under Title III of PROMESA. On June 15, 2017, the Employees Retirement System of the Government of the Commonwealth of Puerto Rico and the Puerto Rico Highways and Transportation Authority also filed petitions under Title III of PROMESA.