Before Congress adjourned for the year last Friday, Sen. Elizabeth Warren (D-MA) introduced the Puerto Rico Emergency Financial Stability Act (PREFSA) to impose a short-term moratorium on creditor lawsuits against Puerto Rico until March 31. The Senate legislation mirrors a proposal that House Minority Leader Nancy Pelosi (D-CA) introduced on the same day.
Joining Warren on the legislation were Senate Minority Leader Harry Reid (D-NV), Sen. Chuck Schumer (D-NY), and Sen. Blumenthal (D-CT).
The bill explains that the “Commonwealth Government is confronted with a dire fiscal emergency and liquidity crisis that imminently threatens the welfare of the people of the Commonwealth,” and that a “temporary stay on litigation with respect to debt holders for the Commonwealth is essential to provide breathing space to the Commonwealth, creditors, and the Congress to determine an orderly process for the Commonwealth to address any future resolution of legal obligations and to provide the Commonwealth a path to sustainable growth[.]”
The bill is intended to provide a stay on litigation by debt holders and “protect essential government services and help the Commonwealth address its liabilities in an orderly fashion, benefiting all stakeholders.”