P.R. Laws tit. 22, § 1077
(a) Authorization to issue restructuring bonds; transition charges—
(1) The Corporation is hereby authorized to issue restructuring bonds (which may include the issuance of restructuring bonds to defease all or any portion of the Authority’s debt) in accordance with the restructuring order approved by the Commission once or from time to time (subject in any case to the satisfaction of the conditions, if any, therefor set forth in any then existing trust agreement) to: (A) defray approved restructuring costs, or (B) refinance restructuring bonds to achieve (without taking into account, for purposes of calculating any such expenses, any restructuring bonds issued to defease all or any portion of the Authority’s debt) net savings in the current value of debt service, or (C) retire all or a portion of the debt secured by the Authority in accordance with the creditor’s agreement. The restructuring bonds related to the initial restructuring resolution shall not be used for the purpose set forth in paragraph (a) of the definition of “approved restructuring costs” established in § 1063(15)(a) of this title.
(2) After the date on which the initial series of restructuring bonds is issued, other series of restructuring bonds may be issued from time to time; Provided, That with respect to any restructuring bonds issued for the purpose described in § 1063(15)(a) of this title, any conditions to maintain the credit rating on such initial series, as set forth in the related trust agreement and subject to the limitation established in § 1067 of this title.
(3) 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 refinanced through said restructuring bonds. 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 cover the incidental costs of the initial issue of restructuring bonds or to defease the revenue bonds of the Authority shall not be subject nor included in the previous calculation.
(b) Approval process.—
(1) Except as otherwise provided by law, the Corporation shall submit a petition to the Commission enclosed with by a proposed restructuring resolution and such other information as required in § 1054x-1 of this title. Pursuant to § 1054x-1 of this title, the Commission shall review the proposed restructuring resolution and such other information to determine whether the calculation methodology followed by the Corporation for the transition charges and the adjustment mechanism to be applied to adjust the transition charges is consistent with the cost allocation and other standards set forth in § 1054x-1 of this title, and is not arbitrary or capricious. The Commission shall hold one or more public hearings in connection therewith, as provided in § 1054x-1 of this title. The Corporation may not adopt a restructuring resolution unless the Commission has either approved a restructuring order or the Commission has lost jurisdiction as provided in § 1054x-1 of this title. The Corporation shall adopt a restructuring resolution within five (5) business days after (A) the Commission has approved the corresponding restructuring order, or (B) the date on which the Commission has lost jurisdiction, as provided in § 1054x-1 of this title.
(2) Any judicial proceedings challenging a restructuring order or the findings and determinations stated in a restructuring resolution shall only be brought in accordance with the procedures set forth in subsection (d) of this section, and the court shall review such findings and determinations under the standard of whether the Commission or the Corporation acted in a manner that was arbitrary or capricious.
(c) Validation of this chapter.—
(1) Within seven (7) days after the approval of this act, the Corporation or the Government Development Bank for Puerto Rico shall publish in the manner provided in clause (2) of this subsection a notice inviting any interested person to bring an action before the San Juan Part of the Court of First Instance of the Commonwealth of Puerto Rico (the “Court”), to determine, among other things:
(A) The validity of this chapter;
(B) that any provision of this chapter, including the imposition of transition charges, neither results in the breach or impairment of any contract or agreement executed between the Commonwealth of Puerto Rico or the Authority and the bondholders or other creditors of the Authority, nor in the taking of property by the Commonwealth of Puerto Rico without just compensation;
(C) that the money to be received from transition charges by or on behalf of the Corporation or any servicer constitute revenues and income of the Corporation and not of the Authority or any other person, and shall not constitute available resources of the Commonwealth of Puerto Rico; and that transition charge shall not constitute a tax or contribution, and that the right of the Corporation to impose and collect transition charges may not be revoked or terminated;
(D) that the transition charge revenues are not subject to any lien or levy whatsoever by bondholders or other creditors of the Authority or any other person other than the lien or levy of the applicable trust agreement to be entered into in connection with the issuance of the applicable restructuring bonds, and
(E) any matters relating to the foregoing including those pertaining to the Constitution of the United States or of the Commonwealth of Puerto Rico.
(2) The Corporation, or the Government Development Bank for Puerto Rico acting on behalf of the Corporation, shall serve notice to all interested persons of the approval of this act and the opportunity to challenge the validity of this chapter through a notice for such purposes to be published once (1) a week for three (3) consecutive weeks in a newspaper of general circulation in the Commonwealth of Puerto Rico and in a newspaper of general circulation or a financial journal published or circulated in the city of New York. In addition, (A) the Corporation, the Government Development Bank for Puerto Rico, and the Authority shall post a copy of the notice on their websites not later than five (5) days after the first publication thereof; (B) the Corporation or the Government Development Bank for Puerto Rico acting on behalf of the Corporation shall (i) deliver or cause to be delivered a copy of the notice to those Interested Persons (to the extent known by the Corporation or the Government Development Bank for Puerto Rico) listed in clauses (a) through (e) of subsection (26) of § 1063 of this title, and (ii) file or cause the Authority to file a copy of the notice with the Electronic Municipal Market Access maintained by the Municipal Securities Rulemaking Board (or its equivalent); (C) the Authority shall deliver a copy of the notice referred to above to all Customers by means of (i) a direct mailing of such notice to such Customers not later than ten (10) days after the first such publication in a newspaper of general circulation in the Commonwealth of Puerto Rico and in a newspaper of general circulation or a financial journal published or circulated in the City of New York, or (ii) an insert included in the next billing statement sent by the Authority to its customers, after the first such publication, and to all Interested persons listed in § 1063(26)(g) of this title; and (D) not later than fifteen (15) days after the first publication, the Corporation or the Authority shall deliver a copy of the notice to any Interested Person listed in § 1063(26)(h) of this title and, to the extent known by the Authority, in § 1063(26)(i) of this title and in this section.
(3) Upon the first publication of the notice in a newspaper of general circulation in the Commonwealth of Puerto Rico and in a newspaper of general circulation or a financial journal published or circulated in the City of New York, all Interested Persons shall be deemed to be aware or have reason to be aware of the approval of this act and of any alleged damages or claims related to this chapter. A sixty (60)-day period to challenge this chapter, as set forth in clause (1) of this subsection shall begin to elapse on the date of the first publication of such notice in a newspaper of general circulation in the Commonwealth of Puerto Rico and in a newspaper of general circulation or a financial journal published or circulated in the City of New York (and if not first published on the same date, the later date of the two publication dates shall be used for this purpose). The notice shall provide a detailed summary of the matter the Corporation seeks to validate. The notice shall use language substantially similar to the following:
Notice of enactment of the Electric Power Authority Revitalization Act On [insert date], Act No. ___ -201¬_ took effect. Any interested party may, on or before [] [not later than [sixty (60)] days after the first publication of notice], appear and contest before the Court of First Instance, San Juan Part, the legality or validity of Chapter IV of said Act or any matter related thereto. No court shall have jurisdiction over any action related to the contest or validity of Chapter IV of the aforementioned Act if such action is brought after the specified date. No contest of any issue or matter pertaining to the aforementioned Act shall be made other than within the time and the manner herein specified. [Detailed summary; additional information] Puerto Rico Electric Power Authority Revitalization Corporation
(4) The court shall have jurisdiction over any action related to the matters addressed in this subsection (c), and only if such action or contest is timely filed within the sixty (60)-day statute of repose. Any interested person may, within said sixty (60)-day period, appear and contest the legality or validity of any matter sought to be determined in relation to Chapter IV of the “Electric Power Authority Revitalization Act”. No other court shall have jurisdiction over any action related to any of the matters addressed in this subsection (c). The court shall lack jurisdiction if such action is brought after such sixty (60)-day period.
(5) If there is more than one action pending concerning similar contests brought in connection with Chapter IV of the “Electric Power Authority Revitalization Act”, such actions shall be consolidated to the extent possible, and the court may order the consolidation of such actions as deemed necessary and proper to avoid unnecessary costs or delays. Such orders shall not be appealable to or reviewable by any court, except on appeal of the final judgment as provided in clause (7) of this subsection. Actions brought pursuant to this subsection (c) shall be entitled to liberal joinder and cross-claim rules and have priority over all other civil actions brought before the court with respect to docketing or consideration of motions, pleadings, hearings, or trial, and for the purpose of hearing and deciding such actions brought pursuant to the provisions of this subsection (c) promptly.
(6) No contest of any issue or matter under this subsection (c) related to Chapter IV of the “Electric Power Authority Revitalization Act” shall be made other than within the time and in the manner provided in this subsection (c), except for any contest to be made in accordance with subsection (d) of this section. None of the provisions of subsection (c) shall be construed in a manner that would preclude the use by the Corporation of any other remedy to determine the validity of any issue or matter, not regulated by this subsection (c).
(7) A review of the final judgment of the Court may only be requested by filing an appeal with the Supreme Court of Puerto Rico, in the manner described in subsection (f)(2).
(d) Validation of the issuance of restructuring bonds.—
(1) After the Commission has approved the initial restructuring order and the Corporation has approved the initial restructuring resolution, and prior to issuing restructuring bonds, the Corporation shall publish in the manner set forth in clause (2) of this subsection a notice inviting any interested person to bring an action in the court to determine:
(A) The validity of the restructuring order, the issuance of restructuring bonds by the Corporation, including provisions for the payment of such restructuring bonds, the validity of such restructuring bonds, and of the outstanding debt of the Authority that is to be refinanced, retired, or defeased through such restructuring bonds, the creation of restructuring property, and the validity of the formula or formulas used to establish the amount of such transition charges for each customer class, including the allocation of financing costs among customer classes. Therefore, nothing provided in this Chapter IV shall hold the Authority or any of its agents or representatives or third parties harmless from any liability or cause for action that originates or is related to the illegality or nullity of the Authority’s outstanding debt that is to be refinanced, retired, or defeased through such restructuring bonds;
(B) The validity and applicability of the transition charges and the adjustment mechanism and the revocability of the right of the Corporation to impose and collect transition charges;
(C) That neither the issuance of the restructuring bonds (including the use of such restructuring bonds by the Authority to defease its outstanding debt) nor the amount of the transition charge results in the breach of any contract or agreement executed between the Commonwealth of Puerto Rico or the Authority and the bondholders or other creditors of the Authority, any fraudulent conveyance or any taking of property by the Commonwealth of Puerto Rico without just compensation or is otherwise subject to annulment or rescission; and
(D) Any or all other matters relating to the foregoing including any matters relating to the United States of America or the Commonwealth of Puerto Rico Constitutional law.
(2) The Corporation shall serve notice to all interested persons of the adoption of the restructuring resolution and the authorization of the restructuring bonds and the opportunity to challenge their validity through a notice for such purposes to be published once (1) a week for three (3) consecutive weeks in a newspaper of general circulation in the Commonwealth of Puerto Rico and in a newspaper of general circulation or a financial journal published or circulated in the City of New York. In addition, the Corporation, the Government Development Bank for Puerto Rico, and the Authority shall, not more than five (5) days after the first such publication, (A) deliver, or cause to be delivered, a copy of the notice to those interested persons (to the extent known by the Corporation or Government Development Bank for Puerto Rico) listed in clauses (a) through (e) of § 1063(26) of this title, and (B) file or cause the Authority to file a copy of the notice with the Electronic Municipal Market Access maintained by the Municipal Securities Rulemaking Board (or its equivalent). The Authority shall deliver a copy of the Corporation’s notice referred to above to all customers by means of (A) a direct mailing of such notice to such customers not later than ten (10) days after the first such publication, or (B) an insert included in the next billing statement sent by the Authority after the first such publication and to all interested persons listed in § 1063(26)(g) of this title. Not later than fifteen (15) days after the first such publication, the Corporation or the Authority shall deliver a copy of the notice to any Interested person listed in § 1063(26)(h) of this title and, to the extent known by the Authority, in § 1063(26)(i) of this title.
(3) Upon the first publication of the notice in a newspaper of general circulation in the Commonwealth of Puerto Rico and in a newspaper of general circulation or a financial journal published or circulated in the City of New York, all interested persons and any other person interested in the matter shall be deemed to be aware or have reason to be aware of the approval of this act and of any damages or claims related to this chapter. A forty-five (45)-day statute of repose to bring an action as set forth in clause (1) of this subsection shall begin to elapse from the date of the first publication of the notice in a newspaper of general circulation in the Commonwealth of Puerto Rico and in a newspaper of general circulation or a financial journal published or circulated in the City of New York (and if not first published on the same date, the later date of the two publication dates shall be used for this purpose). The notice shall provide a detailed summary of the matter the Corporation seeks to validate. The notice shall use language substantially similar to the following:
Notice of the Puerto Rico Electric Power Authority Debt Restructuring On [insert date], the Puerto Rico Electric Power Authority Revitalization Corporation (the “Corporation”) approved Resolution No. [__] (the “Restructuring Resolution”) authorizing the issuance of [insert Restructuring Bonds denomination] in an amount not to exceed [$] of principal. In connection with such issuance, the Corporation, pursuant to authority granted under Act No. __ -20 __ and under an order from the Commission approved, shall impose a Transition Charge of [insert amount and basis of calculation] on all Customers of the Puerto Rico Electric Power Authority beginning [immediately after the issuance of said Restructuring Bonds; if different, add effective date]. Any interested party may, on or before [] [not later than forty-five (45) days after the first publication of notice], appear and contest in the San Juan Part of the Court of First Instance the legality or validity of the aforementioned Restructuring Resolution. No court shall have jurisdiction over any action related to the Restructuring Resolution, if such action is brought after the specified forty-five (45)-day period. No contest of any issue or matter pertaining to the aforementioned Restructuring Resolution shall be made other than within the time and the manner herein specified. [Detailed summary; Additional information] Puerto Rico Electric Power Authority Revitalization Corporation
(4) The court shall have jurisdiction over any action related to the matters addressed in this subsection (d), and only if such challenge or contest is timely filed within the forty-five (45)-day statute of repose. Any interested person may, within this forty-five (45)-day period, appear and contest the legality or validity of any matter pertaining to the restructuring resolution sought to be determined. No other court shall have jurisdiction over any action related to the matters addressed in this subsection (d).
(5) For purposes of this subsection (d), restructuring bonds and transition charges shall be deemed to be in existence upon their authorization and the restructuring bonds and transition charges shall be deemed to be authorized as of the date of adoption of the restructuring resolution by the Board of the Corporation.
(6) No contest of any issue or matter under this subsection (d) related to the restructuring resolution shall be made other than within the time and in the manner herein specified. Nothing in subsection (d) shall preclude the use by the Corporation of any other remedy to determine the validity of any thing or matter, not regulated by this subsection (d).
(7) A review of the final judgment of the court may only be requested by filing an appeal directly with the Supreme Court of Puerto Rico, in the manner described in subsection (f)(2).
(e) If there is more than one action pending concerning similar contests which may be brought in connection with the restructuring resolution, such actions shall be consolidated to the extent possible, and the court may order the consolidation of such actions as deemed necessary or proper to avoid unnecessary costs or delays. Such orders shall not be appealable to or reviewable by any court, except on appeal of the final judgment as provided in this section. Actions brought pursuant to this subsection shall be entitled to liberal joinder and cross-claim rules and have priority over all other civil actions before the court with respect to docketing or consideration of motions, pleadings, hearings, or trial, and for the purpose of hearing and deciding such actions brought pursuant to the provisions of this chapter promptly.
(f) Nature of judgment; appeals.—
(1) Any final judgment of the court entered pursuant to this chapter, if not appealed, or if appealed and the final judgment is upheld, except as otherwise provided by law, shall become and thereafter be forever binding, as to all matters therein adjudicated or which at that time could have been adjudicated against the Corporation and against all other Persons, including the Commonwealth of Puerto Rico, the Commission, the servicer, and the Authority. A final and binding judgment shall permanently prevent any person from bringing any action or proceeding related to any issue as to which the judgment is binding and conclusive. Furthermore, in the case of any final and binding judgment issued pursuant to subsection (d) of this section, it shall be understood that the approval for the issuance of the restructuring bonds has been duly adopted by the Corporation pursuant to this chapter and any other applicable law. Following any final and binding judgment entered pursuant to subsection (d) of this section, the validity of this chapter, the approval of said issuance or any of the provisions of this chapter, including the provisions for the payment of the restructuring bonds to which such approval relates wherever contained, and the validity of said restructuring bonds authorized thereby, shall not be questioned by any person, regardless of any provision to the contrary in this chapter or any other act or regulation, and no action, suit, or proceeding questioning any issue which was heard and decided, including the validity of the outstanding debt of the Authority that is refinanced, retired, or defeased through such restructuring bonds, or which could have been heard and decided, including whether the money received by or on behalf of the Corporation or any servicer constitutes revenue or income of the Corporation or of the Authority or constitutes available resources of the Commonwealth of Puerto Rico, or constitute a tax or contribution, or whether the imposition or collection of the transition charges may be revoked or terminated or whether the transition charge revenues are subject to any lien or levy from the bondholders or other creditors of the Authority, or whether the approval of this act or the issue of restructuring bonds results in the breach of any contract or agreement executed between the Commonwealth of Puerto Rico and the bondholders or other creditors of the Authority, or in any taking of property by the Commonwealth of Puerto Rico without just compensation, or in any fraudulent conveyance, or is otherwise subject to annulment or rescission or any other constitutional matter of United States of America or of the Commonwealth of Puerto Rico whether or not related to the foregoing, shall thereafter be heard by any court.
(2) Notwithstanding any other provision of law to the contrary and any rule or regulation of the courts, no judgment entered pursuant to this chapter shall be appealed unless it is filed with the Supreme Court of Puerto Rico within thirty (30) days after the notice of entry of the judgment of the court, and failure to file such appeal within the specified period shall thereafter prevent any appeals court from exercising jurisdiction over the matters which could have been so appealed.
(g) The Corporation may issue restructuring bonds, in one or more series, and at one or more times, pursuant to an agreement to issue the restructuring bonds or to defease the Authority’s outstanding debt. Restructuring bonds may be sold for cash or delivered to any person for such consideration as the Board of the Corporation may deem proper. Not later than the third business day after the pricing of the related restructuring bonds in accordance with any such agreement, the Corporation shall direct the servicer to calculate, and cause any calculation agent hired by Corporation to verify the calculation of the initial transition charges and shall notify the Commission of such initial transition charges, which shall be effective from the date specified in the restructuring resolution or in the Commission’s notice, without the need for any further action by the Corporation, the Commission, or any other person.
(h) Upon the issuance of the restructuring bonds, the restructuring resolution corresponding thereto, the related transition charges, including those that are non-bypassable or unavoidable, and the procedures for the applicable adjustment mechanism, as provided in a restructuring resolution, trust agreement, or other security document related thereto, shall be irrevocable, final, non-discretionary, and effective without the need for further action by the Corporation or any other Person.
(i) While restructuring bonds are still outstanding, and the approved restructuring costs have not been paid in full (including any payments that have or may become due under ancillary agreements), the transition charges authorized and imposed by this chapter shall be non-bypassable and mandatory and shall apply to all customers.
Without limiting any authority elsewhere conferred, the Authority is hereby authorized to enter into a servicing agreement and discharge such duties of the servicer as may be required or allowed by this chapter, to provide further assurances to the Corporation, other financing entities or the owner (if different) of all or a portion of the restructuring property with respect to the restructuring property and the collection of the transition charges, and to take any actions necessary or desirable to achieve the purposes of this chapter. The Authority, upon petition of the servicer, shall interrupt or suspend the service to defaulting customers on the same basis that the Authority is allowed to interrupt or suspend service for nonpayment of electric power service or other rates. Neither the Corporation, other owner of the restructuring property, or the trustee may directly suspend or interrupt electric service to any customer.
The Corporation, the Authority, and the Servicer (if different from the Authority) shall have the following duties:
(1) To impose and adjust, bill and collect any transition charges applicable to all customers, and shall include in each such bill the applicable transition charge as a separate line item;
(2) To allocate customers” partial payments on a pro rata basis between the Corporation and the Authority as provided in subsection (k)(1) of this subsection;
(3) To take all other actions authorized by law to collect outstanding bills;
(4) To exercise all collection enforcement rights of the owner or pledgee of the restructuring property for the benefit of such owner or pledgee; and
(5) To remit any transition charge revenue to the owner or pledgee of the restructuring property.
The corresponding trust agreement may provide that the calculation of all transition charges and adjustments thereto shall be confirmed by a third-party calculation agent not related to the Government of Puerto Rico or the Authority (which may be the servicer if the Authority is no longer the servicer) designated by the Corporation or the trustee.
The servicer shall, except as otherwise specified in a restructuring resolution, be entitled to reasonable compensation, which in the case of the Authority shall not be less than the estimated incremental cost of imposing and billing the transition charges and collecting the transition charge revenues, preparing servicing reports, and rendering customary servicing services required by any servicing agreement in connection with the restructuring bonds. The Corporation (or the trustee in accordance with the terms of the applicable trust agreement) shall be authorized to replace the servicer in the event of default.
As soon as possible after receipt thereof, all transition charge revenues and the Authority’s charges shall be paid or deposited in a special collection account with a bank incorporated under and subject to the laws and regulations of the United States of America or any state thereof, and licensed to operate in the Commonwealth of Puerto Rico, selected by the Corporation and not related to the Authority or the Commonwealth of Puerto Rico, or under the control of the Authority. Such revenues shall be allocated and remitted to the Corporation or its assignees or creditors and to the Authority or its assignees or creditors on a daily basis in accordance with their respective interests. Any servicing agreement and depository agreement shall include the foregoing deposit and allocation requirements.
Under no circumstances, any transition charges imposed or restructuring property created by the Corporation to secure any restructuring bonds shall be deemed to collected on account of taxes, or be deemed to be revenues of the Authority or the Commonwealth of Puerto Rico, or be deemed to be received as a result of the Authority’s ownership or operation of the System Assets, nor shall any restructuring bonds be deemed to be a debt or other obligation of the Authority or the Commonwealth of Puerto Rico or any of its political subdivisions. In servicing and collecting any transition charges, it shall be understood that the Authority is acting solely as an agent of the Corporation and not as principal, and shall only receive such charges to be held in trust for the exclusive benefit of the Corporation, the holders of restructuring bonds, and persons entitled to receive payment therefrom for any financing costs. The Authority shall immediately transfer any such transition charges received to the special collection account referred to in this subsection.
(j) Restructuring property.—
(1) Restructuring property shall constitute an existing, present and continuing property right for all purposes, whether or not the revenues and proceeds therefrom have been earned, and notwithstanding the fact that the imposition and collection of transition charges shall depend on future actions, including: (A) the rendering of services by the Authority, (B) a servicer discharging, billing and collection functions with respect to transition charges, and (C) the level of future consumption of such service. Restructuring Property shall exist whether or not transition charges have been imposed, billed, earned, or collected and notwithstanding the fact that the value or amount of the restructuring property depends on services to be rendered to customers in the future. Subject to applicable law and regulations, the timely payment of all transition charges shall be a condition to receive service from the Authority.
(2) All restructuring property shall continue to exist until the corresponding restructuring bonds and all ongoing financing costs related to the restructuring bonds have been fully paid.
(3) If the servicer fails to fulfill the obligations provided in this chapter or in any agreement related to the remittance of transition charge revenues, the Corporation, the trustee, or the owners or pledgees of the restructuring property may request any court to order the sequestration and payment of the transition charge revenues, or any other applicable relief. If the court determines that such noncompliance occurred, it shall grant such request for sequestration and payment. The order shall remain in full force and effect notwithstanding any bankruptcy, reorganization, or other insolvency proceedings with respect to a servicer, the Corporation, the Authority or any other person.
(k) Attributes of the restructuring property.—
(1) Restructuring property, transition charges, transition charge revenues, and the interests of a bondholder, financing entity, or any other person in restructuring property or in transition charge revenues are not subject to compensation, counterclaim, surcharge, or defense by a servicer, customer, the Corporation, the Authority, holders of any other debt issued by the Authority (or any other creditors of the Authority) or any other person, or in connection with any default, bankruptcy, reorganization or other insolvency proceeding of any of said persons. To the extent that a customer makes a partial payment of a bill including both transition charges and any other charges, for purposes of its allocation, such payment shall be allocated on a pro rata basis between the transition charges and the other charges.
(2) Restructuring bonds and obligations of the Corporation under ancillary agreements shall be secured by a statutory lien on the restructuring property in favor of the holders or beneficial owners of restructuring bonds and parties to such ancillary agreements. The lien shall be automatically constituted upon issuance of the applicable restructuring bonds without the need for any action or authorization by the Corporation or the Board. The lien shall be valid and binding from the time the restructuring bonds or ancillary agreements are executed. The restructuring property shall be immediately subject to the lien, which shall be effective, binding, and enforceable against the Authority, its creditors, their successors, assignees, and creditors, and all others auxiliary rights therein, regardless of whether those persons have been notified of the lien and without the need for any physical delivery, record, filing, or further action. The lien is created by this chapter rather than by any collateral agreement or issuance, but may be enforced by a trustee or other fiduciary for the holders or beneficial owners of restructuring bonds.
This statutory lien shall be deemed to be a continuously perfected security interest and shall have priority over any other lien, created by law or otherwise, that may be subsequently attached to that restructuring property or any proceeds thereof, unless the holders or beneficial owners of restructuring bonds have agreed otherwise in writing as specified in the applicable trust agreement. This statutory lien is a lien on transition charges and all transition charge revenues that are deposited in any deposit account or other type of account of the servicer or other person where transition charge revenues or other proceeds have been commingled with other funds. Without limiting the effectiveness of the statutory lien created by this chapter, any other lien that may be constituted on transition charge revenues shall be removed when such revenues or proceeds are transferred to a segregated account for an assignee or a financing entity. No application of the adjustment mechanism shall affect the validity, perfection, or priority of the statutory lien created by this chapter. Any transition charge revenues commingled with other funds subject to any lien shall be administered in a manner that allows for the identification of the transition charge revenues and such other funds.
(3) The statutory lien or its priority shall not be affected or impaired by, among other things, the commingling of transition charge revenues or proceeds from transition charges with other amounts regardless of the person holding such amounts. Any transition charge revenues commingled with other funds subject to any lien shall be administered in a manner that allows for the identification of the transition charge revenues and such other funds.
(l) The Authority, any successor or assignee of the Authority or any other Person with any operational control of any portion of the System Assets, whether as owner, lessee, franchisee, or otherwise, and any successor servicer shall be required by this chapter and shall meet and satisfy all obligations imposed herein in the same manner and to the same extent as their predecessor, including the obligation to bill, adjust, and demand the payment of transition charges.
(m) All or any portion of restructuring property may be pledged to secure the payment of restructuring bonds, amounts payable to financing entities, and other ongoing financing costs. To the extent that the restructuring property remains pledged to secure any such payments, the revenues from the collection of transition charges shall be applied solely to the payment of ongoing financing costs.
(n) Restructuring bonds shall be deemed to be securities in nature, in which all public officials and agencies of the Commonwealth of Puerto Rico and all public corporations, municipalities, and instrumentalities, all insurance companies and associations and other persons engaged in the insurance business, all banks, bankers, trust companies, savings banks and savings associations, including savings and credit unions, building and loan associations, investment companies and other persons engaged in the banking business, all administrators, conservators, executors, trustees, and other fiduciaries, and all other persons currently or hereafter authorized to invest in bonds or in other obligations of the Commonwealth of Puerto Rico, may invest funds in their control or belonging to them. The restructuring bonds may be deposited with and may be received by any public official and entities of the Commonwealth of Puerto Rico and all municipalities and public corporations for any purpose for which the deposit of bonds or other obligations of the Commonwealth of Puerto Rico is currently or may hereafter be authorized.
(o) Tax exemption.—
(1) This chapter and the effects of its enforcement are in the public interest and shall inure to the benefit of the people of the Commonwealth of Puerto Rico. Accordingly, the Corporation shall be deemed to discharge a critical government function in exercising the powers conferred by this chapter. Neither the Corporation, or the restructuring property, including transition charges and transition charge revenues, regardless of whether the Corporation is the owner of the restructuring property, shall be subject to any fees, taxes, special ad valorem levies, or assessments of any kind, including income taxes, franchise taxes, sales taxes, or other taxes, or payments or contributions in lieu of taxes.
(2) The Commonwealth of Puerto Rico hereby pledges to the purchasers and all subsequent holders and assignees of restructuring bonds, considering the acceptance and payment of the restructuring bonds, that the restructuring bonds and the income therefrom and all revenues, money, and other property pledged to pay or to secure the payment of such bonds, shall be exempt from taxation at all times; and this pledge may be included in the restructuring bonds.
(p) Restructuring bonds issued by virtue of this chapter shall be negotiable instruments for all purposes of the Commercial Transactions Act and of any other applicable laws of the Commonwealth of Puerto Rico, subject only to the provisions for registration of the restructuring bonds.
(q) Personal or Corporate Liability on Restructuring Bonds. Without impairment to any rights granted under the provisions of §§ 3077 et seq. of Title 32, known as the “Act on Claims and Suits Against the Commonwealth”, no present or future member of the Board, official, agent, or employee of the Corporation shall be held civilly liable for any action taken in good faith in the discharge of his/her duties and responsibilities under this chapter; unless it is established, that he/she engaged in conduct constituting an offense, and shall be indemnified for any costs incurred in connection with any claim for which they enjoy immunity as provided herein. The Board and its individual directors, and the officials, agents, or employees of the Corporation shall also be indemnified for any civil liability adjudicated under the laws of the United States of America, unless it is established that he/she engaged in conduct constituting an offense, breach of fiduciary duty, or gross negligence. Restructuring bonds shall not constitute a debt of the Commonwealth of Puerto Rico, nor shall they be payable from any funds other than those of the Corporation; and such bonds shall bear on the face thereof a statement to that effect.
History —Feb. 16, 2016, No. 4, § 35.