HR-1192-117
Became Public Law No: 117-82.
Sponsored by Nydia Velázquez (D-NY)
What it does
This law requires professionals (such as lawyers and financial advisors) hired in Puerto Rico's debt restructuring cases to file verified written statements disclosing any connections they have with interested parties — such as creditors, debtors, or board employees — before they can be paid for their services. The Financial Oversight and Management Board for Puerto Rico must maintain and publish a list of all parties considered "interested." A professional may be denied compensation if their disclosure is missing, incomplete, or reveals a disqualifying conflict of interest.
Who benefits
Puerto Rico residents and taxpayers, who would gain greater transparency over the professionals managing the island's debt restructuring. Creditors and bondholders, who would have better visibility into potential conflicts affecting decisions in the case. The general public and oversight watchdogs, who would have access to disclosed relationships. Competing professionals who do not have conflicts of interest, as the rules would create a more level playing field.
Who is hurt
Professionals — including attorneys, accountants, and financial advisors — who have existing relationships with interested parties and may be disqualified from lucrative work or denied compensation. Firms with broad financial industry ties may find it harder to qualify for work on Puerto Rico's debt cases. Professionals who fail to file adequate disclosures, even inadvertently, risk losing payment for work already performed.
Supporters argue
Supporters argue that Puerto Rico's debt restructuring involves billions of dollars of public money and directly affects the lives of over three million U.S. citizens. Without mandatory conflict-of-interest disclosures, professionals with undisclosed ties to creditors or other interested parties could steer decisions in ways that benefit those parties rather than Puerto Rico's residents or its creditors as a whole. Existing federal bankruptcy rules already require similar disclosures in standard Chapter 11 cases; this law simply closes a gap by applying comparable standards to the unique PROMESA oversight process. Transparency in who is advising the board and who those advisors have financial relationships with is a basic accountability measure that protects the integrity of the entire restructuring process.
Opponents argue
Opponents argue that the disclosure requirements, while well-intentioned, could significantly narrow the pool of qualified professionals willing or able to work on Puerto Rico's complex debt case. Large financial and legal firms with the deepest expertise in municipal debt restructuring are precisely the ones most likely to have prior relationships with creditors or other interested parties — meaning the most capable advisors could be disqualified or deterred. Critics also contend that the compensation-denial mechanism is a harsh penalty that could be triggered by technical or inadvertent filing errors rather than genuine misconduct, creating legal uncertainty that discourages participation. This could ultimately slow the restructuring process and increase costs for Puerto Rico.
Constitutional context
This law operates under Congress's authority over U.S. territories under Article IV, Section 3 of the Constitution, which grants Congress broad power to make rules for territories like Puerto Rico. It also connects to the broader PROMESA framework (2016), which itself was grounded in the Territory Clause and Commerce Clause authority. No direct Equal Protection or Due Process challenges are anticipated, as the disclosure requirements apply uniformly to all professionals in the proceeding. The law does not implicate the active tension areas identified in the Civil Rights constitutional context (e.g., Equal Protection tiers, Section 5, or First Amendment vs. anti-discrimination), as it is primarily a procedural and financial accountability measure.
Checks and balances
This law modestly expands the authority of the federal judiciary (bankruptcy courts overseeing PROMESA proceedings) and the Financial Oversight and Management Board — an executive-branch-adjacent entity — to enforce disclosure requirements and deny compensation. Congress retains its Article IV plenary authority over the territory. No significant shift in the balance of power between branches is created; the law primarily adds a procedural accountability layer within the existing PROMESA oversight structure.
Historical precedent
Federal bankruptcy Rule 2014 already requires professionals in standard Chapter 11 bankruptcy cases to disclose connections with interested parties before being employed. PRRADA applies a similar disclosure framework to the PROMESA debt restructuring process, which had operated without equivalent requirements since 2016.