P.R. Laws tit. 13, § 113f
(a) Subject to the remaining provisions of this section and notwithstanding any contrary contractual provision rendered unenforceable by this chapter, the petitioner, with the approval of GDB (or GDB at the request of the Governor on the petitioner’s behalf), subject to Court approval after notice and a hearing, may transfer all or part of the petitioner’s encumbered assets (which transfer may also include unencumbered assets) free and clear of any lien, claim, interest, and employee claims against a successor employer, for good and valuable consideration consisting of any and all of cash, securities, notes, revenue pledges, and partial interests in the transferred assets or enterprise.
(b) A petitioner shall not effect a transfer of assets to an entity that is not a Commonwealth entity, including a transfer of all or substantially all of the assets of such petitioner, unless all the following requirements are met:
(1) Applicable law (other than this chapter) permits such transfer;
(2) the Court orders that the liens, claims, and interests shall attach to the proceeds of transfer in their order of priority, with each dispute over priorities to be resolved, in the Court’s discretion, before or after the closing of the transfer; Provided, however, That, in the event of a transfer of all or substantially all of the petitioner’s assets, the petitioner may recover the reasonable and necessary administrative expenses incurred in its §§ 113-113nn of this title case in preserving or disposing of such assets that are transferred pursuant to this subsection;
(3) the Court shall have determined that the transferee shall have undertaken to perform the same public functions with the property acquired (either alone or together with other property and/or entity) as the petitioner had been performing, unless the Court determines that any public functions not to be performed by the transferee will be performed by another entity or no longer are necessary;
(4) the Court finds that a transfer to an entity that is not a Commonwealth Entity is the product of:
(A) Adequate marketing and arms-length bargaining designed to procure a price that is at least the reasonably equivalent value of the assets proposed to be transferred, or
(B) a fair auction process;
(5) to the extent, if any, that the gross or net revenue of the petitioner to be transferred was pledged to secure any affected debt, such pledges shall have first priority against all portions of the proceeds of transfer other than portions allocable to other assets to be transferred free of liens or security interests securing allowed claims; and
(6) in the event of a transfer of all or substantially all of the petitioner’s assets, all claims not scheduled pursuant to subsection (a)(2) of § 113a of this title shall be paid in full.
(c) For the avoidance of doubt, subsection (b) of this section does not confer any power on a petitioner to sell assets to a non-Commonwealth entity that such petitioner does not currently posses under applicable law.
(d) A petitioner may effect a transfer of assets to a Commonwealth entity, including a transfer of all or substantially all of the assets of such petitioner, notwithstanding any other applicable law to the contrary, only if:
(1) the Court orders that the liens, claims, and interests shall attach to the proceeds of transfer in their order of priority, with each dispute over priorities to be resolved, in the Court’s discretion, before or after the closing of the transfer; Provided, however, That, in the event of a transfer of all or substantially all of the petitioner’s assets, the petitioner may recover the reasonable and necessary administrative expenses incurred in its §§ 113-113nn of this title case in preserving or disposing of such assets that are transferred pursuant to this subsection;
(2) the Court shall have determined that the transferee shall have undertaken to perform the same public functions with the property acquired (either alone or together with other property and/or entity) as the petitioner had been performing, unless the Court determines that any public functions not to be performed by the transferee will be performed by another entity or no longer are necessary;
(3) the transfer to an entity that is a Commonwealth entity is for a price that is at least the reasonably equivalent value of the assets proposed to be transferred, taking into account the requirement that they be used to perform the public functions the petitioner had been performing, unless the Court determines that any public functions not to be performed by the transferee will be performed by another entity or no longer are necessary;
(4) to the extent, if any, that the gross or net revenue of the petitioner to be transferred was pledged to secure any affected debt, such pledges shall have first priority against all portions of the proceeds of transfer other than portions allocable to other assets to be transferred free of liens or security interests securing allowed claims; and
(5) in the event of a transfer of all or substantially all of the petitioner’s assets, all claims not scheduled pursuant to subsection (a)(2) of § 113a of this title shall be paid in full.
(e) The petitioner (or GDB at the Governor’s request on the petitioner’s behalf) may transfer part, but not all or substantially all, of the petitioner’s assets not subject to a lien or pledge without Court approval if such transfer is independent of any and all transfers of encumbered assets.
(f) All transfers of unencumbered property or encumbered property or both shall be free and clear of successor liability imposed by otherwise applicable law.
(g) No transfer shall be approved unless the petitioner, or GDB on behalf of the petitioner, shall have included in its request for approval the reasons why such proposed transfer is reasonably likely to maximize value for creditors, in the aggregate, consistent with enabling the continued carrying out of the petitioner’s public functions and the Court shall have found such reasons plausible.
History —June 28, 2014, No. 71, § 307.