The expert on the Promesa Act, Rolando Emmanuelli, warned on Wednesday that governor Ricardo Rosselló’s decision to embrace the Title III will have a strong impact in the economy of Puerto Rico because it will stop not just the bondholder’s demands, but also the claims of the individuals, including the paralyzation of tax disbursements.

‘All of those disbursements will be paralyzed, there is a rule in the bankruptcy law that says that you cannot discriminate in favor or against the creditor, ergo, if when filing you aren’t paying anyone, you cannot pay the creditors of the Tax Returns, this is the same for everyone which is why I’m saying that May 3 rd is not a day for people to be happy, it is a historic moment that will not only present that as a country we had severe difficulties but will also bring other consequences,’ Emmanuelli assured.

Emmanuelli explained that after the Government filed for Title III of Promesa, the people that want to receive their tax disbursements will now have to go to the court as debtors.

According to what the lawyer explained, the PROMESA act establishes that the Chief Judge of the Supreme Court of the United States will name a judge who will attend the case of Puerto Rico. However, the Government will be able to continue operating under the limits the Fiscal Control Board (JCF) and the Bankruptcy Court allows them.

Likewise, the Bankruptcy Court will litigate and resolve all claims from creditors and determine who has the right to be paid first and what types of disbursements the Government will be able to do, for example: disbursements for infrastructure, for the payment of pensioners and the court can even decide to lift the ‘statement’ so that creditors can initiate their charges.

Emmanuelli explained that the court will have a level of control of the process of reorganizing that the FCB seeks and at the same time, the court will determine if it accepts or not the fiscal plan presented by the federal entity.

‘The fiscal plan is a base document, but the problem is seeing if the fiscal plan expectations will be met in light of the austerity means imposed by the Board and seeing if the income projections will be met,’ the lawyer explained.

Meanwhile, he sustained that if no trustworthy income projections exist, the expectations of betterment for the economy of the country will not be able to be met, to which he states that it will be important to observe if the FCB will turn around their austerity measure, the same measures used in Detroit, where it was determined that said measures would not resolve the problem so they implemented using money that was destined for the payment of the debt to better the infrastructure of the state, as well as the services and quality of life of the employees to make Detroit an attractive place once again.

‘In Puerto Rico no one believes the economy will get better and thus that Fiscal Plan, even though it is the base for all projects, may be modified by the board and could eventually be a different plan than the one recently certified,’ the expert on PROMESA detailed

On the other hand, Emanuelli also warned that the pensions of retirees will also be affected because one of the fundamentals that bankruptcy establishes is that the filing s made to win space for negotiation, specifically in the renegotiation of the pensions debt which is over 40 billion dollars.