case the next case today is attorney a great please introduce yourself for the record and proceed with your argument understood the puerto rico regulatory authority has reviewed  by the fact that the court approved the contract if it was a new contract you just told those court approval wasn't needed you have all and i thought gee that may be the argument is being made that when you go to the puerto rican regulatory authority you would get to start the proceeding all over again and you would win some delay but in your and serious to judge you just disavowed that you said no it was presented as a new contract they approved that now mind you you then ask them to reconsider it that's a separate argument but i'm trying to see wh what i hear you saying is because the church swain ruled one way or the procedures are different in the regulatory proceeding but i didn't see in your brief any citation to any procedures an explanation of how they would be different and i thought you just told me this was presented as a new contract be the issue is the  haven't counsel if i'm following your argument the argument seems to be well it makes it more difficult for us to persuade the regulatory agency to reopen once the title three court has not only approved it the assumption not the contracts but  using the business judgment raul has said and there is no business judgment issue here it was a proper exercise of the business judgment i think that's what i'm hearing but i still don't understand the argument if you have antitrust issues and the agency chooses to address those i'm not sure how to judge swain's to approval in any way stops you from presenting the issues have i lost th that's an issue counsel isn't that an issue between you and a predator rico regulatory agency that really has nothing to do with the title three know in that proceeding that they conducted did they ever say we're only doing procedure x instead of procedure wide because we're bound by  difficult by judge swain's decision and then you have the problem of judge woodcocks question well why couldn't you raise all those issues earlier before and now you seem to want us to do something to undo what the puerto rican regulatory agency has to stop and it's not what this case is about no you're wrong they council yes judge attorney craig you could use your audio and your video at this time and attorney mendez kohlberg if you could under used and introduce yourself on the record to proceed yet and with the court's permission i would like to reserve one minute of my time for rebuttal well yes i'll allow it but i have to tell you you had better get to the yourself your honor questions about the difference between how does it affect if it's a your contract or anything if it's an amended contract and let's remember that if it's an amended contract then  even if these to our new contracts reach didn't require her approval they still would get administrator's priority that would be something that the oversight board would have to request after it automatically being added an administrative expense and the board having to request that the bankruptcy court treat this as administrative expenses that's what the differences it would be if it's one of the ija is your honor but then it would be not only harm that would cause the minister to expenses what other creditors but also this standard and we these evaluated if it's a balance of equities or if it's the business judgment standard because of the great impact of these contracts on the public interest which is something that the district cou il your i'm sorry i am not following you if judge swain's approval is not required for new contracts and your argument is this is a new contract why does this whole discussion of what's in the public interest and you're into it at all  regulatory body which is now they were just told they were presenting before the regulatory authority as new contracts and that's one dollar of the things that i wanted to clarify before this court  pending before the end you know ok so you have not been deprived of the opportunity to make those arguments so again what is this case about it's about whether those issues to the state to the puerto rican regulatory authority before checks wayne took any action so how is her action an not ording to puerto rico law and that even though the name that he states that even though the name of the of the contracts remain the same still the a range men's chosen by two parties to scenario and a is with are to assumed contract administrative expenses scenario b it's a new contract what provides are and not necessarily your honor i'm want to talk about this standard is in terms of the contract excel and how would the court address the the nature of the contract in order to decide  counsel i heard you say earlier that as you understood it there is no different test that is used to define an administrative expenses between assume contracts and new contracts i just want to be sure that's what you said i was actually referring more to you yes you were asked whether they there was a different test which was used by the bankruptcy court as to whether something is classified as administrative expenses which would give it priority one whether there was a different test between judge k august scenario and a and scenario b you close the n answer then that thank you attorney mendez please mute your audio and your video attorney just sat next to your audio and video and introduce yourself for the record to proceed with your argument good morning your honors may please the court my name is daniel the sat ne because the press the move to assume two major contracts that for decades have provided forty percent of the power generation to puerto rico and her residence on the other hand appellants who are not parties to these contracts cannot even explain to you how they are harmed by this assumption by assuming these contract under bankruptcy code section three hundred and sixty five press is able to assure these critical power providers that it will timely pay real dollars for this energy and that if it fails to do so they will have an administrative expense claim from paid the mouse and as your honor is recognized whether this was done through an assumption or as a new contract and as appellants conceded the test is the same do these contracts benefit the debtor and it's clear that they do so again appellant cannot demonstrate any harm here in exchange for practice assuming these contracts prechter was able to negotiate amendments to them that secure the island's most dependable and efficient source of power for the next twelve years and that generates estimated savings of over one hundred million dollars per year means that properly passed on to its rest to its rate payers the bottom line is that opponents concede that there is no other source for this power on the island and the criticisms of these contracts are also unfounded because these contracts were independently approved by the oversight board as compliant with practice fiscal policy and independently approved by objection that we received and try to focus back wards but the reality is that these contracts have been in place for decades and when we filed title three there were still many years left on the time of the contract so let's do it what does it look at the contract the prep it has and if you know critical contract we need to make that in them but we think we can go back and we can negotiate amendments to them that achieve savings that's exactly what we did and so when we amended these contracts we looked at them and we saw that under puerto say it's an odd sentence because it's an argument on their part that these are new contracts because that argument is totally self defeating when three hundred and sixty three dollars which is incorporated which is not incorporated into title three of generally requires that if you enter into a contract outside the ordinary course of business you have to see court approval because that's not present and coming in because of section three hundred and five which prohibits the court from interfering with the bettors counter parties would be able to at the end of the bankruptcy whenever we emerge whenever that may be they will get paid in full it's just a priority claim it just means who gets paid st now if there is nothing stopping us today from entering into a new contract and paying them full today well then the administrative expense doesn't put them in a better position than what we could do as new contracts so there's really no harm to appellants and by providing our counter parties with this in ministry of expense we're able to enter into these contracts on less burdensome terms because our counter parties are sure that will perform under them is there any chance that perjury can regulatory authority has still laid its decision on motion is preventing this from being right it just fails and the reason it fails is because the motion is right because all elements for contract assumption under bankruptcy code section three hundred and sixty five have been met that is present has presented a live valid and binding contract that it was just to assume these contracts are not hypothetical and their obligations are not abstract there is no legal impediment to either side's performing the filing of this motion and able t the motion moot but as this court observed in barnstable the possibility of future moodiness does not negate the current rightness we have the green light today that the traffic light could turn yet yellow or red in the future does not stop the parties from proceeding forward now the fine apply i just want to make on life and this is a practical point grabber metzl a project of a certain scale multiple approvals are often needed and this court has recognized that a debtor like pres must have the flexibility to run these processes in parallel as this court has been rigged and recently and algonquin a separate independent proceeding like the pres proceeding is right so long as it removes a barrier to the ultimate approval of the that's an important point because it goes to mr grace argument that the president is deferential to judge slang the order makes it contingent on spreads approval all appellants rights whatever they may be before prabal are preserved so press found makes it unambiguous so it's inappropriate for this court to look past the four corners of the contract and credit mr ortiz's statement which was simply not a legal statement and not meant for  consumption by the court and can certainly not affect what the counter parties to this contract believe so on the vacation i just want to note that parties routinely amended assume contracts and bankruptcy the bankruptcy code does not require a take it or leave it approach to exacted toward contracts it encourages the parties to reach agreements that will further the debtors reorganization and that's exactly what happened here presto in compliance with its fiscal plan renegotiated the contracts to achieve amendments that provided substantial savings and flexibility moving forward could you see what particular authority would you cite as to when the proposition that in addition to assuming a contract you can change it substantive way and then assume yes your honor we cited a line of cases for the proposition that a contract can be materially modified and still dollars that's a specific case and there the court approved the debtor's decision to assume an amended lease under section three hundred and sixty five and also just want to let you know that this is a common procedure so common that in the bankruptcy case a forever twenty one there are actually procedures that the court put in place to allow the debtor to amend an assumed contract this is not a controversial proposition that this is what doctors can do so  i want to just return to what the standard for porter in puerto rico is for determining whether a contract is no baited and here puerto rico law is clear that the will of the parties is the controlling factor in determining innovation to occur under the puerto rico civil code this requires the party's intent to be established conclusively and without any trace of doubt and here as i just mentioned those contracts expressively state that the parties lee stated that they intend to amend the contract and the court has nevertheless looked at the substance of the contract and said no innovation actually occurred here now they do ask the court to perform to perform that test and to determine whether a tacit no patient has occurred but here to puerto rico civil code requires that the new agreement be absolutely incompatible in all points with the original one such that it constitutes a radical change in nature to explore it's clear that this type of no vacation is a drastic result that can only be produced when the parties are fully aware of it now far from being absolutely incompatible in all points the contracts here extend the same fundamental relationship among the parties matters he continues to say l n g to press the and press the continues to purchase generating capacity from echo electric well some of the pricing terms and mechanics were adjusted to improve flexibility and reliability amendments do not make the amended contract incompatible an all points they're not incompatible at all because they do not alter the fundamental relationship circumstances the standard for contract assumption is the business judgment standard this means the court should defer to the debtor and approve the assumption so long as the contracts provide some benefit to the debtor and are not based on bad faith when working priest parents advocate for the balance of equity standard on the basis that these contracts implicate important public policy questions and we agree they do just go and that's progeny do not recognize a free wheeling public policy exception to the business judgment standard instead they only applies the balance of equity standards in commercial chapter eleven cases where section three hundred and sixty five dollars as a federal law conflicted with another federal law as administered by a federal regulator here no federal policy is implicated and no regulator has appeared to contest the assumption all parties to the contract support the motion and the only as clickable regulator is a territorial regulator  state plays yes yes your honor is the balance of equity test it's only been done in contract rejections because we need looking federal policies to sharpen the dispute and weighted better interest in rehabilitation on the one hand against the interest to the regulator on the other hand here appellants are asking you to take into consideration that better than trade union pension the competitor the interest rate payers environmental groups that's improper that would transform this court into the arbiter of what is thank you attorney to sat nick at this time if you could make your audio and your video and attorney mendez call burke if you could under your device and introduce yourself you have one minute of her bottle yes thank you this is jessica where they state that the or originally was a conventional power purchase agreement that was converted into a colony agreement which makes it a substantial difference in the nature of that contract and that's you thank you that concludes the arguments for today this session of the honorable united states court of appeals is now recess until the next session of the court god save the united states of america and this honorable court coun you may disconnect from the hearing