P.R. Laws tit. 22, § 1075
(a) The Corporation is hereby authorized to:
(1) Adopt restructuring resolutions;
(2) In consideration of providing financial assistance to the Authority by payment of approved restructuring costs, impose and collect transition charges in connection with the financing of approved restructuring costs through the issue of restructuring bonds for the benefit of the Authority, including
(A) making such transition charges mandatory or non-bypassable to customers, and
(B) approving an adjustment mechanism, subject to the Commission’s approval in a restructuring order prior to the issue of the restructuring bonds;
(3) Issue restructuring bonds as stated in a restructuring resolution and to pledge the restructuring property to the payment thereof. However, the Corporation may issue restructuring bonds to retire, defease, or refinance revenue bonds of the Authority that have been issued on or before December 31st, 2015 (“revenue bonds”) only if, as a result of the issue of the restructuring bonds, the current value of the total debt service of said restructuring bonds is at least seven hundred twenty-five million dollars ($725,000,000) less than the current value of the total debt service of the revenue bonds of the Authority that have been issued on or before December 31st, 2015. For this calculation, the yield of the restructuring bonds shall be used, which bonds shall be issued as determined by the Corporation using typical assumptions, as determined by the Corporation in consultation with the advisors thereof. The aforementioned verification calculation shall be used only on the closing date of the exchange offer with respect to the restructuring transactions included in the creditors’ agreement only and solely with respect to the issuance of the restructuring bonds issued for such purposes. For clarification purposes, any restructuring bond issued to defray the incidental costs of the initial issuance of restructuring bonds or to defease the revenue bonds of the Authority shall not be subject nor included in the previous calculation.
None of the foregoing shall prevent the Corporation from issuing restructuring bonds to retire, defease, or refinance revenue bonds of the Authority that have been issued on or before December 31st, 2015, if, as a result of the issue of the restructuring bonds, the current value of the total debt service of said restructuring bonds is at least seven hundred twenty-five million dollars ($725,000,000) less than the current value of the total debt service of the revenue bonds of the Authority that have been issued on or before December 31st, 2015.
(4) Provide for and direct the use of proceeds of restructuring bonds on behalf of the Authority in accordance with a restructuring resolution and a trust agreement entered into by the Corporation in connection with such restructuring bonds; and
(5) Contract for the administration and servicing of restructuring property and restructuring bonds, and for administrative services, including hiring a manager or administrator other than an employee of the Authority.
(b) The Corporation shall have no authority to engage in other business activities; but shall, in connection with the powers provided in subsection (a) of this section, have the power to:
(1) Sue and be sued; and settle claims or complaints on such terms as the Board of the Corporation may approve;
(2) have a seal and alter the same at its will;
(3) draft and modify by-laws for its internal organization and operations and adopt and modify rules and regulations governing its operations and the use of its property, in each case, in accordance with the limitations set forth in this chapter;
(4) draft and execute contracts and all other instruments necessary or convenient for the exercise of its powers and functions under this chapter and to bring any action to protect or enforce any right conferred upon it by any law, contract or other agreement, including to draft and execute contracts with the Authority, any other servicers, any financing entity or any other person to administer and service restructuring property, to service restructuring bonds issued by the Corporation and to provide administrative services to the Corporation, and to pay compensation for such services;
(5) appoint officials, agents, and employees, establish their duties and functions, fix their compensation, and contract consulting, accounting, and legal services to provide professional and technical assistance and advice, as well as pay compensation therefor;
(6) pay its operating expenses, scheduled debt service on restructuring bonds, and other ongoing financing costs;
(7) provide for the terms and conditions of the restructuring bonds;
(8) implement and enforce the adjustment mechanism in accordance with the corresponding restructuring resolution and servicing agreement;
(9) procure insurance against any loss in connection with its activities, properties, and assets;
(10) invest any funds under its custody and control in investment securities with an investment grade credit rating or under any ancillary agreement;
(11) establish and maintain such reserves and special fund accounts, to be held in trust or otherwise, as may be required by agreements entered into in connection with the restructuring bonds, or any agreement between the Corporation and third parties;
(12) as collateral for the payment of the principal of and interest on any restructuring bonds issued by the Corporation pursuant to this chapter, and any agreement entered into in connection therewith, pledge and create liens on all or any portion of its revenues or assets, including restructuring property, unspent proceeds of its restructuring bonds, transition charge revenues, and earnings from the investment and reinvestment of unspent proceeds of its restructuring bonds and transition charge revenues, and
(13) exercise such other corporate powers not inconsistent with the provisions of this chapter, as are conferred upon corporations by the laws of the Commonwealth of Puerto Rico and take any and all actions necessary or convenient to achieve its purposes and exercise the powers expressly conferred and granted in this section.
(c) While any restructuring bonds remain outstanding or until any financing costs that have or may become due is paid in full, the Corporation shall not be authorized to dissolve, liquidate, or transfer or sell all or substantially all of the Corporation’s assets (except as expressly provided in the applicable trust agreement), or merge or consolidate, directly or indirectly, with any person. Additionally, the Corporation shall not have the power or authority to incur, guarantee, or otherwise commit to pay any debt or other obligations other than restructuring bonds and financing costs unless otherwise allowed by a restructuring resolution. The Corporation shall not own any assets or property other than the restructuring property, incidental personal property necessary for the possession and operation of the restructuring property and any investment-grade securities in accordance with the terms of the restructuring bonds. The Corporation shall keep its assets and liabilities separate and distinct from those of any other person, including the Authority.
(d) The Corporation shall not pledge its assets to secure the obligations of any other person or hold out its credit as being available to satisfy the obligations of any other person.
(e) The Corporation and the Authority shall keep its books, financial records, and accounts (including inter-entity transaction accounts) in a manner so as to identify separately the assets and liabilities of each such entity from those of any other person; each shall observe all corporate procedures and formalities, including, where applicable, the holding of regular periodic and special meetings of the governing bodies thereof, the recording and maintenance of minutes of such meetings, and the recording and maintenance of resolutions adopted at such meetings, if any; and all transactions and agreements by and among the Corporation, the Authority, and any person shall reflect the separate legal existence of each entity and shall be formally documented in writing. The Corporation shall not engage in any transaction with an affiliate of the Authority, the Corporation, the Government Development Bank for Puerto Rico, or the Commonwealth of Puerto Rico except under terms similar to those available to unaffiliated persons in a transaction between third parties.
(f) The Corporation and the Authority shall each have separate annual financial statements, prepared in accordance with generally accepted accounting principles that reflect the separate assets and liabilities of each such entity and all transactions and transfers of funds involving each of such entities, and each shall pay or bear the cost of the preparation of its own financial statements regardless of whether such statements (whether audited or not) are prepared internally or by a public audit firm that prepares or audits its financial statements.
(g) The Corporation and the Authority shall pay their respective liabilities and losses from their own respective separate assets. In compliance with the foregoing, the Corporation shall compensate all employees, consultants, independent contractors, and agents from its own funds for services provided to the Corporation by such employees, consultants, independent contractors, and agents. The Corporation shall maintain a sufficient number of employees in accordance with its business purpose.
(h) The Corporation and the Authority shall keep any of its assets, funds, or liabilities separate from the assets, funds or liabilities of any other person. Each of them shall conduct all business with third parties in its own name, separate and distinct from the other and shall correct any known misunderstanding regarding its separate identity.
(i) Neither the assets nor the creditworthiness of the Authority shall be deemed to be available for the payment of any liability of the Corporation, and vice versa. Assets shall not be transferred between the Authority and the Corporation in a manner that is inconsistent with this chapter, or with the intent to hinder or defraud creditors.
(j) The Authority, in its papers and the statements of its officials, shall refer to the Corporation as a separate and distinct legal entity, and shall take no action that is inconsistent with this chapter or that would give any of its creditors reason to believe either that any such obligations incurred by the Authority would also be the obligation of the Corporation, or that the Authority were not or would not continue to be an entity separate and different from the Corporation.
History —Feb. 16, 2016, No. 4, § 33.