132 
Bond’’ means a Bond that does not pay interest on 
a current basis, but for which interest amounts are 
added to principal over time as specified in the rel-
evant offering materials and which converts to a cur-
rent pay bond on a future date. 
(6) INFORMATION
AGENT.—The term ‘‘Infor-
mation Agent’’ means an information agent ap-
pointed in accordance with subsection (k). 
(7) 
INSURED
BOND.—The 
term 
‘‘Insured 
Bond’’ means a bond subject to a financial guar-
antee or similar insurance contract, policy or surety 
issued by a monoline insurer. 
(8) ISSUER.—The term ‘‘Issuer’’ means, as ap-
plicable, the Territory Government Issuer or an Au-
thorized Territorial Instrumentality that has issued 
or guaranteed at least one Bond that is Out-
standing. 
(9) MODIFICATION.—The term ‘‘Modification’’ 
means any modification, amendment, supplement or 
waiver affecting one or more series of Bonds, includ-
ing those effected by way of exchange, repurchase, 
conversion, or substitution. 
(10) OUTSTANDING.—The term ‘‘Outstanding,’’ 
in the context of the principal amount of Bonds, 
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133 
shall be determined in accordance with subsection 
(b). 
(11) OUTSTANDING
PRINCIPAL.—The term 
‘‘Outstanding Principal’’ means— 
(A) for a Bond that is not a Capital Ap-
preciation Bond or a Convertible Capital Appre-
ciation Bond, the outstanding principal amount 
of such Bond; and 
(B) for a Bond that is a Capital Apprecia-
tion Bond or a Convertible Capital Appreciation 
Bond, the current accreted value of such Cap-
ital Appreciation Bond or a Convertible Capital 
Appreciation Bond, as applicable. 
(12) POOL.—The term ‘‘Pool’’ means a pool es-
tablished in accordance with subsection (d). 
(13) QUALIFYING
MODIFICATION.—The term 
‘‘Qualifying Modification’’ means a Modification pro-
posed in accordance with subsection (g). 
(14) SECURED
POOL.—The term ‘‘Secured 
Pool’’ means a Pool established in accordance with 
subsection (d) consisting only of Bonds that are se-
cured by a lien on property, provided that the inclu-
sion of a Bond Claim in such Pool shall not in any 
way limit or prejudice the right of the Issuer, the 
Administrative Supervisor, or any creditor to re-
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134 
characterize or challenge such Bond Claim, or any 
purported lien securing such Bond Claim, in any 
other manner in any subsequent proceeding in the 
event a proposed Qualifying Modification is not con-
summated. 
(15) SENIOR
CLAIMS.—The term ‘‘Senior 
Claims’’ means claims that are senior in right of 
payment to other claims, or are prior in right of 
payment from any collateral, pledged revenue, or 
other interest of the issuer in property, under any 
agreement, law or constitution, other than a right to 
prior payment based solely on an earlier scheduled 
maturity date or amortization. 
(16) TERRITORY
GOVERNMENT
ISSUER.—The 
term ‘‘Territory Government Issuer’’ means the Gov-
ernment of Puerto Rico or such covered territory for 
which an Oversight Board has been established pur-
suant to section 101. 
(b) OUTSTANDING BONDS.—In determining whether 
holders of the requisite principal amount of Outstanding 
Bonds have voted in favor of, or consented to, a proposed 
Qualifying Modification, a Bond will be deemed not to be 
outstanding, and may not be counted in a vote or consent 
solicitation for or against a proposed Qualifying Modifica-
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135 
tion, if on the record date for the proposed Qualifying 
Modification— 
(1) the Bond has previously been cancelled or 
delivered for cancellation or is held for reissuance 
but has not been reissued; 
(2) the Bond has previously been called for re-
demption in accordance with its terms or previously 
become due and payable at maturity or otherwise 
and the Issuer has previously satisfied its obligation 
to make, or provide for, all payments due in respect 
of the Bond in accordance with its terms; 
(3) the Bond has been substituted with a secu-
rity of another series; or 
(4) the Bond is held by the Issuer or by an Au-
thorized Territorial Instrumentality of the Territory 
Government Issuer or by a corporation, trust or 
other legal entity that is controlled by the Issuer or 
an Authorized Territorial Instrumentality of the 
Territory Government Issuer, as applicable. 
For purposes of this subsection, a corporation, trust or 
other legal entity is controlled by the Issuer or by an Au-
thorized Territorial Instrumentality of the Territory Gov-
ernment Issuer if the Issuer or an Authorized Territorial 
Instrumentality of the Territory Government Issuer, as 
applicable, has the power, directly or indirectly, through 
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136 
the ownership of voting securities or other ownership in-
terests, by contract or otherwise, to direct the manage-
ment of or elect or appoint a majority of the board of di-
rectors or other persons performing similar functions in 
lieu of, or in addition to, the board of directors of that 
legal entity. 
(c) CERTIFICATION OF DISENFRANCHISED BONDS.— 
Prior to any vote on, or consent solicitation for, a Quali-
fying Modification, the Issuer shall deliver to the Calcula-
tion Agent a certificate signed by an authorized represent-
ative of the Issuer specifying any Bonds that are deemed 
not to be Outstanding for the purpose of subsection (b) 
above. 
(d) DETERMINATION OF POOLS FOR VOTING.—The 
Administrative Supervisor, in consultation with the Issuer, 
shall establish Pools in accordance with the following: 
(1) Not less than one Pool shall be established 
for each Issuer. 
(2) A Pool that contains one or more Secured 
Bonds shall be a Secured Pool. 
(3) The Administrative Supervisor shall estab-
lish Pools according to the following principles: 
(A) For each Issuer that has issued mul-
tiple Bonds that are distinguished by specific 
provisions governing priority or security ar-
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137 
rangements, including Bonds that have been 
issued as general obligations of the Territory 
Government Issuer to which the Territory Gov-
ernment Issuer pledged the full or good faith, 
credit, and taxing power of the Territory Gov-
ernment Issuer, separate Pools shall be estab-
lished corresponding to the relative priority or 
security arrangements of each holder of Bonds 
against each Issuer, as applicable, provided, 
however, that the term ‘‘priority’’ as used in 
this section shall not be understood to mean 
differing payment or maturity dates. 
(B) For each Issuer that has issued senior 
and subordinated Bonds, separate Pools shall 
be established for the senior and subordinated 
Bonds corresponding to the relative priority or 
security arrangements. 
(C) For each Issuer that has issued mul-
tiple Bonds, for at least some of which a guar-
antee of repayment has been provided by the 
Territory Government Issuer, separate Pools 
shall be established for such guaranteed and 
non-guaranteed Bonds. 
(D) Subject to the other requirements con-
tained in this section, for each Issuer that has 
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139 
(A) holders of a majority in amount of all 
uninsured bonds outstanding in the modified 
Pool; and 
(B) holders (including insurers with power 
to vote) of a majority in amount of all Insured 
Bonds. 
(e) AUTHORIZATION OF TERRITORY INSTRUMENTAL-
ITIES.—A covered territorial instrumentality is an Author-
ized Territorial Instrumentality if it has been specifically 
authorized to be eligible to avail itself of the procedures 
under this section by the Administrative Supervisor. 
(f) INFORMATION DELIVERY REQUIREMENT.—Be-
fore solicitation of acceptance or rejection of a Modifica-
tion under subsection (h), the Issuer shall provide to the 
Calculation Agent, the Information Agent, and the Admin-
istrative Supervisor, the following information— 
(1) a description of the Issuer’s economic and 
financial circumstances which are, in the Issuer’s 
opinion, relevant to the request for the proposed 
Qualifying Modification, a description of the Issuer’s 
existing debts, a description of the impact of the 
proposed Qualifying Modification on the Territory’s 
or its territorial instrumentalities’ public debt; 
(2) if the Issuer is seeking Modifications affect-
ing any other Pools of Bonds of the Territory Gov-
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140 
ernment Issuer or its Authorized Territorial Instru-
mentalities, a description of such other Modifica-
tions; 
(3) if a Fiscal Plan with respect to such Issuer 
has been certified, the applicable Fiscal Plan cer-
tified in accordance with section 201; and 
(4) such other information as may be required 
under applicable securities laws. 
(g) QUALIFYING MODIFICATION.—A Modification is 
a Qualifying Modification if— 
(1) the Issuer proposing the Modification has 
consulted with holders of Bonds in each Pool of such 
Issuer prior to soliciting a vote on such Modification; 
(2) each exchanging, repurchasing, converting, 
or substituting holder of Bonds of any series in a 
Pool affected by that Modification is offered the 
same amount of consideration per amount of prin-
cipal, the same amount of consideration per amount 
of interest accrued but unpaid and the same amount 
of consideration per amount of past due interest, re-
spectively, as that offered to each other exchanging, 
repurchasing, converting, or substituting holder of 
Bonds of any series in a Pool affected by that Modi-
fication (or, where a menu of instruments or other 
consideration is offered, each exchanging, repur-
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141 
chasing, converting, or substituting holder of Bonds 
of any series in a Pool affected by that Modification 
is offered the same amount of consideration per 
amount of principal, the same amount of consider-
ation per amount of interest accrued but unpaid and 
the same amount of consideration per amount of 
past due interest, respectively, as that offered to 
each other exchanging, repurchasing, converting, or 
substituting holder of Bonds of any series in a Pool 
affected by that Modification electing the same op-
tion under such menu of instruments); 
(3) the Modification is certified by the Adminis-
trative Supervisor as being consistent with the re-
quirements set forth in section 104(i)(1) and is in 
the best interests of the creditors and is feasible; or 
(4) notwithstanding paragraphs (1) through 
(3), the Administrative Supervisor has issued a cer-
tification that— 
(A) the requirements set forth in section 
104(i)(2) have been satisfied; or 
(B) the Modification is consistent with a 
restructuring support or similar agreement to 
be implemented pursuant to the law of the cov-
ered territory executed by the Issuer prior to 
the establishment. 
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142 
(h) SOLICITATION.— 
(1) Upon receipt of a certification from the Ad-
ministrative Supervisor under subsection (g), the In-
formation Agent shall, if practical and except as pro-
vided in paragraph (2), submit to the holders of any 
Outstanding Bonds of the relevant Issuer, including 
holders of the right to vote such Outstanding Bonds, 
the information submitted by the relevant Issuer 
under subsection (f)(1) in order to solicit the vote of 
such holders to approve or reject the Qualifying 
Modification. 
(2) If the Information Agent is unable to iden-
tify the address of holders of any Outstanding 
Bonds of the relevant Issuer, the Information Agent 
may solicit the vote or consent of such holders by— 
(A) delivering the solicitation to the paying 
agent for any such Issuer or Depository Trust 
Corporation if it serves as the clearing system 
for any of the Issuer’s Outstanding Bonds; or 
(B) delivering or publishing the solicitation 
by whatever additional means the Information 
Agent, after consultation with the Issuer, deems 
necessary and appropriate in order to make a 
reasonable effort to inform holders of any Out-
standing Bonds of the Issuer which may in-
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143 
clude, notice by mail, publication in electronic 
media, publication on a website of the Issuer, or 
publication in newspapers of national circula-
tion in the United States and in a newspaper 
of general circulation in the territory. 
(i) WHO MAY PROPOSE A MODIFICATION.—For each 
Issuer, a Modification may be proposed to the Administra-
tive Supervisor by the Issuer or by one or more holders 
of the right to vote the Issuer’s Outstanding Bonds. To 
the extent a Modification proposed by one or more holders 
of the right to vote Outstanding Bonds otherwise complies 
with the requirements of this title, the Administrative Su-
pervisor may accept such Modification on behalf of the 
Issuer, in which case the Administrative Supervisor will 
instruct the Issuer to provide the information required in 
subsection (f). 
(j) VOTING.—For each Issuer, any Qualifying Modi-
fication may be made with the affirmative vote of the hold-
ers of the right to vote at least two-thirds of the Out-
standing Principal amount of the Outstanding Bonds in 
each Pool that have voted to approve or reject the Quali-
fying Modification, provided that holders of the right to 
vote not less than a majority of the aggregate Outstanding 
Principal amount of all the Outstanding Bonds in each 
Pool have voted to approve the Qualifying Modification. 
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144 
The holder of the right to vote the Outstanding Bonds 
that are Insured Bonds shall be the monoline insurer in-
suring such Insured Bond to the extent such insurer is 
granted the right to vote Insured Bonds for purposes of 
directing remedies or consenting to proposed amendments 
or modifications as provided in the applicable documents 
pursuant to which such Insured Bond was issued and in-
sured. 
(k) CALCULATION AGENT.—For the purpose of cal-
culating the principal amount of the Bonds of any series 
eligible to participate in such a vote or consent solicitation 
and tabulating such votes or consents, the Territory Gov-
ernment Issuer may appoint a Calculation Agent for each 
Pool reasonably acceptable to the Administrative Super-
visor. 
(l) INFORMATION AGENT.—For the purpose of ad-
ministering a vote of holders of Bonds, including the hold-
ers of the right to vote such Bonds, or seeking the consent 
of holder of Bonds, including the holders of the right to 
vote such Bonds, to a written action under this section, 
the Territory Government Issuer may appoint an Informa-
tion Agent for each Pool reasonably acceptable to the Ad-
ministrative Supervisor. 
(m) BINDING EFFECT.— 
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145 
(1) A Qualifying Modification will be conclusive 
and binding on all holders of Bonds whether or not 
they have given such consent, and on all future hold-
ers of those Bonds whether or not notation of such 
Qualifying Modification is made upon the Bonds, 
if— 
(A) the holders of the right to vote the 
Outstanding Bonds in each Pool of the Issuer 
pursuant to subsection (j) have consented to or 
approved the Qualifying Modification; 
(B) the Administrative Supervisor certifies 
that— 
(i) the voting requirements of this sec-
tion have been satisfied; 
(ii) the Qualifying Modification com-
plies with the requirements set forth in 
section 104(i)(1); and 
(iii) except for such conditions that 
have been identified in the Qualifying 
Modification as being non-waivable, any 
conditions on the effectiveness of the 
Qualifying Modification have been satisfied 
or, in the Administrative Supervisor’s sole 
discretion, satisfaction of such conditions 
has been waived; 
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146 
(C) with respect to a Bond Claim that is 
secured by a lien on property and with respect 
to which the holder of such Bond Claim has re-
jected or not consented to the Qualifying Modi-
fication, the holder of such Bond— 
(i) retains the lien securing such Bond 
Claims; or 
(ii) receives on account of such Bond 
Claim, through deferred cash payments, 
substitute collateral, or otherwise, at least 
the equivalent value of the lesser of the 
amount of the Bond Claim or of the collat-
eral securing such Bond Claim; and 
(D) the district court for the territory or, 
for any territory that does not have a district 
court, the United States District Court for the 
District of Hawaii, has, after reviewing an ap-
plication submitted to it by the applicable 
Issuer for an order approving the Qualifying 
Modification, entered an order that the require-
ments of this section have been satisfied. 
(2) Upon the entry of an order under para-
graph (1)(D), the conclusive and binding Qualifying 
Modification shall be valid and binding on any per-
son or entity asserting claims or other rights, includ-
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147 
ing a beneficial interest (directly or indirectly, as 
principal, agent, counterpart, subrogee, insurer or 
otherwise) in respect of Bonds subject to the Quali-
fying Modification, any trustee, any collateral agent, 
any indenture trustee, any fiscal agent, and any 
bank that receives or holds funds related to such 
Bonds. All property of an Issuer for which an order 
has been entered under paragraph (1)(D) shall vest 
in the Issuer free and clear of all claims in respect 
of any Bonds of any other Issuer. Such Qualifying 
Modification will be full, final, complete, binding, 
and conclusive as to the territorial government 
Issuer, other territorial instrumentalities of the terri-
torial government Issuer, and any creditors of such 
entities, and should not be subject to any collateral 
attack or other challenge by any such entities in any 
court or other forum. Notwithstanding anything 
herein to the contrary, the foregoing shall not preju-
dice the rights and claims of any party that insured 
the Bonds, including the right to assert claims under 
the Bonds as modified following any payment under 
the insurance policy, and no claim or right that may 
be asserted by any party in a capacity other than 
holder of a Bond affected by the Qualifying Modi-
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148 
fication shall be satisfied, released, discharged, or 
enjoined by this provision. 
(n) JUDICIAL REVIEW.— 
(1) The district court for the territory or, for 
any territory that does not have a district court, the 
United States District Court for the District of Ha-
waii shall have original and exclusive jurisdiction 
over civil actions arising under this section. 
(2) Notwithstanding section 106(e), there shall 
be a cause of action to challenge unlawful applica-
tion of this section. 
(3) The district court shall nullify a Modifica-
tion and any effects on the rights of the holders of 
Bonds resulting from such Modification if and only 
if the district court determines that such Modifica-
tion is manifestly inconsistent with this section. 
SEC. 602. APPLICABLE LAW. 
In any judicial proceeding regarding this title, Fed-
eral, State, or territorial laws of the United States, as ap-
plicable, shall govern and be applied without regard or ref-
erence to any law of any international or foreign jurisdic-
tion. 
Æ 
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