UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of

THE COMMONWEALTH OF PUERTO RICO, et 

al.

Debtors.1

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of

PUERTO RICO ELECTRIC POWER 

AUTHORITY,

Debtor. 

PROMESA 

Title III

No. 17 BK 4780-LTS

Re: ECF No. 2996, 2997, 29982

THE PUERTO RICO FISCAL AGENCY AND 

FINANCIAL ADVISORY AUTHORITY’S RESPONSE TO THE MEDIATION 

TEAM’S NOTICE AND PROPOSED AMENDED ORDER ESTABLISHING 

THE PREPA MEDIATION’S TERMS AND CONDITIONS 

1 The Debtors in these Title III Cases, along with each Debtor’s respective Title III case number and the last four (4) 

digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico 

(“Commonwealth”) (Bankruptcy Case No. 17-BK-3283- LTS) (Last Four Digits of Federal Tax ID: 3481); (ii) Puerto 

Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17-BK-3284-LTS) (Last Four Digits of 

Federal Tax ID: 8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case No. 17-

BK-3567-LTS) (Last Four Digits of Federal Tax ID: 3808); (iv) Employees Retirement System of the Government of 

the Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17-BK-3566-LTS) (Last Four Digits of Federal 

Tax ID: 9686); (v) Puerto Rico Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17- BK-4780-LTS) (Last

Four Digits of Federal Tax ID: 3747); and (vi) Puerto Rico Public Buildings Authority (“PBA”) (Bankruptcy Case 

No. 19-BK-5523-LTS) (Last Four Digits of Federal Tax ID: 3801) (Title III case numbers are listed as Bankruptcy 

Case numbers due to software limitations).

2 All citations to docket numbers refer to filings in Case No. 17-04780-LTS unless otherwise stated.

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To the Honorable United States District Judge Laura Taylor Swain:

The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”) through its 

undersigned counsel, hereby states and prays as follows:

1. As this Court has consistently recognized, “these restructuring cases require a . . .

holistic approach that focuses on the continuation and future of a government and its 

instrumentalities and their ability to meet the needs of the Commonwealth’s residents as well as 

provide proper recompense of creditors.” See In re Fin. Oversight & Mgmt. Bd. for P.R., 432 F. 

Supp. 3d 25, 30 (D.P.R. 2020), aff’d, 954 F.3d 1 (1st Cir. 2020). The primary purpose of 

government insolvency proceedings, including those brought under PROMESA, is the “continued 

provision of public services,” not “merely to maximize creditors’ recoveries.” Id. Applied here, 

these principles mean restructuring PREPA’s debts to allow PREPA to progress toward achieving 

its primary purpose: supplying safe, reliable, cost-efficient, clean energy for the people and 

businesses of Puerto Rico.

2. These goals will always be paramount for AAFAF and the Oversight Board. 

Consistent with these goals and AAFAF’s statutory mandate, throughout these Title III cases 

AAFAF has supported and been instrumental in implementing reasonable sustainable settlements

that serve the interests of the people of Puerto Rico. It stands ready to do so here if a consensual 

agreement can be reached that helps ensure that PREPA can provide quality services at a cost that 

is sustainable for the people and businesses of Puerto Rico. AAFAF appreciates and supports the 

Mediation Team’s stated goals of “PREPA’s actual emergence as promptly as practicable from 

this Title III case” and limiting unnecessary, costly litigation (ECF No. 2997 at 3). But a deal at 

any cost for the sake of reaching a deal is not in the best interest of Puerto Rico. 

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3. While AAFAF believes that continued negotiations can achieve consensus, 

AAFAF respectfully disagrees with the Mediation Team’s assessment that “settlement is within 

reach.” ECF No. 2996 at 3. A careful review of the publicly disseminated mediation proposals,

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reveals that the parties are actually quite far apart. The wide gulf that exists between the Oversight 

Board’s and the bondholders’ proposals is readily apparent under any metric. A keen focus on, 

and understanding of, Puerto Rico’s unique energy environment and demographics, as well as 

taking into account the realities of the municipal market,

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is crucial to achieving any deal in this 

case. Moreover, both the bondholders’ and the Oversight Board’s proposals left many key terms 

to be finalized, the resolution of which may materially impact the Government’s ability to support

or implement a transaction. Further, AAFAF does not agree that mediation process “infirmities” 

resulted in “unnecessary and substantially insurmountable roadblocks to making further progress.” 

ECF No. 2975 at 5–6. Simply and plainly put, the parties have not reached a deal because they 

have fundamental disagreements about the nature and scope of the bondholders’ rights. 

4. AAFAF is fully aware of the risks and costs of litigation and, throughout all of the 

Title III cases before this Court, has prudently encouraged the settlement process. But as we have 

seen time and time again in these Title III cases, targeted, efficient litigation can at times drive

parties to a consensual resolution. This is precisely what happened after significant litigation and 

certain key orders were issued regarding the scope of creditor rights for COFINA, ERS, HTA, 

PRIFA, and CCDA.5 AAFAF respectfully submits that the wide gulf in competing proposals will 

3 AAFAF’s responses herein to the statements the Mediation Team made in its submissions are based upon publicly 

available information. 

4 As specifically dictated by PROMESA, “The purpose of the Oversight Board is to provide a method for a covered 

territory to achieve fiscal responsibility and access to the capital markets.” 48 U.S.C. § 2121 (PROMESA section 

101(a)).

5 See generally Employees Ret. Sys. of the Gov’t of the Commw. of P.R. v. Altair Global Credit Opportunities Fund (A), 

LLC, et al., Adv. Proc. No. 17-00213 (D.P.R. July 21, 2017); Official Committee of Unsecured Creditors of the 

Commw. of P.R., et al. v. Whyte, et al., Adv. Proc. No. 17-00257 (D.P.R. Sept. 8, 2017); Fin. Oversight & Mgmt. Bd. 

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not be closed until this Court adjudicates the resolution of the key gating legal issues set forth in 

the Oversight Board’s scheduling motion (ECF No. 2956). The litigation schedule the Oversight 

Board proposed represents the most expedient path forward to break the stalemate that now exists. 

Conversely, the Mediation Team’s proposal to litigate the “non-recourse” issue, dismissal/lift 

stay/receiver disputes, and a Toggle Plan simultaneously (ECF No. 2997 at 3, n.4) would result in 

duplicative and wasteful litigation for the reasons explained in AAFAF’s response to the Oversight 

Board’s litigation proposal (ECF No. 2967). Expedited litigation to determine what rights the 

bondholders actually have provides a clear and necessary path forward. 

5. Moreover, AAFAF respectfully disagrees with the Mediation Team’s 

characterization of the mediation process to date, but is constrained by mediation confidentiality 

from responding more fully and specifically. Directing the Oversight Board to retain a new 

professional unfamiliar with PREPA’s operations and unique challenges, the negotiations to date 

in PREPA’s case, the complexities of municipal credits, or the complicated history of the Title III 

cases—all at the Puerto Rico taxpayer’s expense—would be highly prejudicial to PREPA and the 

people of Puerto Rico at this stage of the proceedings. Onboarding a new advisor to lead 

negotiations for PREPA would inject significant additional cost and delay into these proceedings

and undo the progress the Mediation Team states has been made and can be made through further 

mediation. See ECF No. 2975 ¶ 2 (stating that “the Mediation Team remains convinced that 

settlement is within reach”). While AAFAF and the Oversight Board have had disagreements, the 

Oversight Board’s municipal financial advisors have successfully worked for years to achieve 

consensual resolutions across these Title III cases that rightfully prioritize the people of Puerto 

for P.R. v. Ambac Assurance Corp., et al., Adv. Proc. No. 20-00003 (D.P.R. January 16, 2020); Fin. Oversight & 

Mgmt. Bd. for P.R. v. Ambac Assurance Corp., et al., Adv. Proc. No. 20-00004 (D.P.R. January 16, 2020); Fin. 

Oversight & Mgmt. Bd. for P.R. v. Ambac Assurance Corp., et al., Adv. Proc. No. 20-00005 (D.P.R. January 16, 

2020). 

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Rico and the continued provision of governmental services. This mediation process has been no 

different. 

6. Finally, AAFAF objects to the Mediation Team’s request that this Court order the 

Mediation Parties to share their financial analyses with the Mediation Team and, if the Mediation 

Team directs, with the other Mediation Parties. See ECF No. 2996 ¶ 4. Much of these materials 

are protected by some combination of the attorney-client, attorney work product, or deliberative 

process privilege protection, because AAFAF and the Oversight Board’s respective counsel work 

with their financial advisors to evaluate strategy and proposals. In re Fin. Oversight and Mgt. Bd. 

for Puerto Rico, 386 F. Supp. 3d 175, 183 (D.P.R. 2019), objections overruled, 392 F. Supp. 3d 

244 (D.P.R. 2019) (overruling Bondholders’ argument that substantial need warrants the 

production of fiscal plan and budget related documents over which the Oversight Board properly 

asserted the deliberative process privilege). AAFAF does not understand the Mediation Team to 

be demanding the parties produce privileged materials, nor have they articulated any legal basis 

that would justify such a result. 

WHEREFORE, AAFAF respectfully requests that the Court enter an Amended Terms 

and Conditions Order that permits Mediation to continue in a fashion that does not interfere with 

moving the case forward as set forth in the Oversight Board’s scheduling motion (ECF No. 2956). 

[Remainder of this page intentionally left blank.]

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Dated: September 23, 2022

San Juan, Puerto Rico

Respectfully submitted,

O’MELVENY & MYERS LLP

/s/ Maria J. DiConza 

John J. Rapisardi

Maria J. DiConza

(Admitted Pro Hac Vice)

7 Times Square 

New York, NY 10036 

Telephone: (212) 326-2000 

Facsimile: (212) 326-2061 

Email: jrapisardi@omm.com 

mdiconza@omm.com

-andPeter Friedman

(Admitted Pro Hac Vice)

1625 Eye Street, NW 

Washington, DC 20006 

Telephone: (202) 383-5300 

Facsimile: (202) 383-5414 

Email: pfriedman@omm.com 

-andElizabeth L. McKeen

Ashley M. Pavel

610 Newport Center Drive, 17th Floor

Newport Beach, CA 92660

Telephone: (949) 823-6900

Facsimile: (949) 823-6994

Email: emckeen@omm.com

apavel@omm.com 

Attorneys for the Puerto Rico Fiscal Agency 

and Financial Advisory Authority

MARINI PIETRANTONI MUÑIZ LLC

/s/ Luis C. Marini-Biaggi 

Luis C. Marini-Biaggi

USDC No. 222301 

250 Ponce de León Ave., Suite 900

San Juan, Puerto Rico 00918

Telephone: (787) 705-2171

Facsimile: (787) 936-7494

Attorneys for the Puerto Rico Fiscal Agency 

and Financial Advisory Authority 

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