United States Court of Appeals

For the First Circuit

No. 22-1079

IN RE: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO 

RICO, AS REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE 

FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE FOR THE PUERTO RICO SALES TAX FINANCING 

CORPORATION, a/k/a Cofina; THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE 

EMPLOYEES' RETIREMENT SYSTEM OF THE GOVERNMENT OF THE 

COMMONWEALTH OF PUERTO RICO; THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, AS REPRESENTATIVE FOR THE 

PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY; THE FINANCIAL 

OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE FOR THE PUERTO RICO ELECTRIC POWER 

AUTHORITY (PREPA); THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD 

FOR PUERTO RICO, AS REPRESENTATIVE OF THE PUERTO RICO PUBLIC 

BUILDINGS AUTHORITY,

Debtors,

THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE FOR THE COMMONWEALTH OF PUERTO RICO; THE 

FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE OF THE PUERTO RICO PUBLIC BUILDINGS AUTHORITY,

Debtors, Appellees, Cross-Appellants,

THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, AS 

REPRESENTATIVE FOR THE EMPLOYEES' RETIREMENT SYSTEM OF THE 

GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO,

Debtor, Appellee,

v.

COOPERATIVA DE AHORRO Y CREDITO ABRAHAM ROSA; COOPERATIVA DE 

AHORRO Y CREDITO DE CIALES; COOPERATIVA DE AHORRO Y CREDITO DE 

JUANA DIAZ; COOPERATIVA DE AHORRO Y CREDITO DE RINCON; 

COOPERATIVA DE AHORRO Y CREDITO DE VEGA ALTA; COOPERATIVA DE 

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AHORRO Y CREDITO DR. MANUEL ZENO GANDIA,

Objectors, Appellants, Cross-Appellees,

SUIZA DAIRY CORP.,

Objector, Claimant, Appellant, Cross-Appellee,

LUIS F. PABON BOSQUES; RAUL MARTINEZ PEREZ; ELVIN A. ROSADO 

MORALES; CARLOS A. ROJAS ROSARIO; RAFAEL TORRES RAMOS,

Creditors, Appellants, Cross-Appellees,

DESARROLLADORA ORAMA, S.E.; C.O.D. TIRE DISTRIBUTORS IMPORTS 

ASIA, INC.; CORREA TIRE DISTRIBUTOR INC.; WORLD WIDE TIRE, INC.; 

SEQUERIA TRADING CORPORATION; SABATIER TIRE CENTER, INC.; VICTOR 

LOPEZ CORTES, INC.; MULTI GOMAS, INC.; JOSE COLLAZO PEREZ; 

IVELISSE TAVARES MARRERO; MANUEL PEREZ ORTIZ; CORAL COVE, INC.; 

SUCESION ANGEL ALVAREZ PEREZ; ANTONIO COLON SANTIAGO; 

COOPERATIVA DE AHORRO Y CREDITO DE AGUADA; VILMA TERESA TORRES 

LOPEZ; VIVIANA ORTIZ MERCADO; ORLANDO TORRES BERRIOS; GERMAN 

TORRES BERRIOS; JUAN ALBERTO TORRES BERRIOS; VHERMANOS TORRES 

TORRES, INC.; CORPORACION PLAYA INDIA, S.E.; MARIANO RAMOS 

GONZALEZ; RAMON MORAN LOUBRIEL; RAFAEL MORAN LOUBRIEL; ANA MORAN 

LOUBRIEL; SAN GERONIMO CARIBE PROJECT, INC.; CARIBBEAN AIRPORT 

FACILITIES INC.; ESTATE OF RAUL DE PEDRO & DIANA MARTINEZ; 

ALFONSO FERNANDEZ CRUZ; SUN AND SAND INVESTMENTS, CORP.; 

FDR1500, CORP.; MARGARETA BLONDET; SUCESION COMPUESTO POR MARIA 

I. RUBERT BLONDET; SONIA RUBERT BLONDET; MARGARITA RUBERT

BLONDET; SONIA RUBERT, Administradora; MANUEL A. RIVERA-SANTOS; 

JORGE RIVERA-SANTOS; CARLOS MANUEL RIVERA-SANTOS; PABLO MELENDEZ 

BRULLA; SUCESION AGUSTIN RODRIGUEZ COLON; GLORIA M. ESTEVA 

MARQUES; SUCESION MANUEL MARTINEZ RODRIGUEZ; LUIS REYES FEIKERT; 

JORGE RAMON POZAS; MIRIAM SANCHEZ LEBRON; JUAN A. TAPIA ORTIZ; 

ANTONIO PEREZ COLON,

Claimants, Appellees,

PFZ PROPERTIES, INC.; OSCAR ADOLFO MANDRY APARICIO; MARIA DEL 

CARMEN AMALIA MANDRY LLOMBART; SELMA VERONICA MANDRY LLOMBART; 

MARIA DEL CARMEN LLOMBART BAS; OSCAR ADOLFO MANDRY BONILLA; 

GUSTAVO ALEJANDRO MANDRY BONILLA; YVELISE HELENA FINGERHUT 

MANDRY; MARGARET ANN FINGERHUT MANDRY; VICTOR ROBERT FINGERHUT 

MANDRY; JUAN CARLOS ESTEVA FINGERHUT; PEDRO MIGUEL ESTEVA 

FINGERHUT; MARIANO JAVIER MCCONNIE FINGERHUT; JANICE MARIE 

MCCONNIE FINGERHUT; VICTOR MICHAEL FINGERHUT COCHRAN; MICHELLE 

ELAINE FINGERHUT COCHRAN; ROSA ESTELA MERCADO GUZMAN; EDUARDO 

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JOSE MANDRY MERCADO; SALVADOR RAFAEL MANDRY MERCADO; MARGARITA 

ROSA MANDRY MERCADO; ADRIAN ROBERTO MANDRY MERCADO; VICENTE 

PEREZ ACEVEDO; CORPORACION MARCARIBE INVESTMENT; DEMETRIO AMADOR 

INC.; DEMETRIO AMADOR ROBERTS; MARUZ REAL ESTATE CORP.; LORTU-TA 

LTD., INC.; LA CUARTEROLA, INC.; JUAZA, INC.; CONJUGAL 

PARTNERSHIP ZALDUONDO-MACHICOTE; FRANK E. TORRES RODRIGUEZ; EVA 

TORRES RODRIGUEZ; FINCA MATILDE, INC.; JORGE RAFAEL EDUARDO 

COLLAZO QUINONES,

Objectors, Claimants, Appellees,

ANTONIO MARTIN CERVERA; MARIA TERESITA MARTIN; WANDA ORTIZ 

SANTIAGO; NANCY I. NEGRON-LOPEZ; GROUP WAGE CREDITORS; YASHEI 

ROSARIO; ANA A. NUNEZ VELAZQUEZ; EDGARDO MARQUEZ LIZARDI; MARIA 

M. ORTIZ MORALES; ARTHUR SAMODOVITZ; MIGUEL LUNA DE JESUS;

ISMAEL L. PURCELL SOLER; ALYS COLLAZO BOUGEOIS; MILDRED BATISTA 

DE LEON; JAVIER ALEJANDRINO OSORIO; SERVICE EMPLOYEES 

INTERNATIONAL UNION (SEIU); INTERNATIONAL UNION, UNITED 

AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF 

AMERICA; MAPFRE PRAICO INSURANCE COMPANY; CERTAIN CREDITORS WHO 

FILED ACTIONS IN THE UNITED STATES DISTRICT COURT FOR THE 

DISTRICT OF PUERTO RICO; MED CENTRO, INC., f/k/a Consejo de 

Salud de la Comunidad de la Playa de Ponce, Inc.; ASOCIACION DE 

JUBILADOS DE LA JUDICATURA DE PUERTO RICO; HON. HECTOR URGELL 

CUEBAS; COOPERATIVA DE AHORRO Y CREDITO VEGABAJENA; UNIVERSITY 

OF PUERTO RICO RETIREMENT SYSTEM TRUST; PETER C. HEIN; MIRIAM E. 

LIMA COLON; BETZAIDA FELICIANO CONCEPCION; ANGEL L. MENDEZ 

GONZALEZ; ASOCIACION DE MAESTROS PUERTO RICO; ASOCIACION DE 

MAESTROS DE PUERTO RICO-LOCAL SINDICAL; MORGAN STANLEY & CO. 

LLC; GOLDMAN SACHS & CO. LLC; J.P. MORGAN SECURITIES LLC; 

SANTANDER SECURITIES LLC; SIDLEY AUSTIN LLP; BMO CAPITAL MARKETS 

GKST, INC.; CITIGROUP GLOBAL MARKETS INC.; SAMUEL A. RAMIREZ & 

CO., INC.; MESIROW FINANCIAL, INC.; MERRILL LYNCH, PIERCE, 

FENNER & SMITH INC.; MERRILL LYNCH CAPITAL SERVICES, INC.; 

BARCLAYS CAPITAL INC.; RBC CAPITAL MARKETS, LLC; RAYMOND JAMES & 

ASSOCIATES, INC.; COMMUNITY HEALTH FOUNDATION OF P.R. INC.; 

QUEST DIAGNOSTICS OF PUERTO RICO, INC.; U.S. BANK TRUST NATIONAL 

ASSOCIATION, as Trustee for the PRPFC Outstanding Bonds and 

PRIFA Bonds, and Fiscal Agent for PRPBA Bonds; U.S. BANK 

NATIONAL ASSOCIATION, as Trustee for the PRPFC Outstanding Bonds 

and PRIFA Bonds, and Fiscal Agent for PRPBA Bonds; NILSA 

CANDELARIO; EL OJO DE AGUA DEVELOPMENT, INC.; PEDRO JOSE NAZARIO 

SERRANO; JOEL RIVERA MORALES; MARIA DE LOURDES GOMEZ PEREZ; 

HECTOR CRUZ VILLANUEVA; LOURDES RODRIGUEZ; LUIS M. JORDAN 

RIVERA; TACONIC CAPITAL ADVISORS LP; AURELIUS CAPITAL 

MANAGEMENT, LP; CANYON CAPITAL ADVISORS LLC; FIRST BALLANTYNE 

LLC; MOORE CAPITAL MANAGEMENT, LP; PUERTO RICO FISCAL AGENCY AND 

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FINANCIAL ADVISORY AUTHORITY; HON. PEDRO R. PIERLUISI URRUTIA; 

UNITED STATES, on behalf of the Internal Revenue Service; 

ASOCIACION PUERTORRIQUENA DE LA JUDICATURA, INC.; FEDERACION DE 

MAESTROS DE PUERTO RICO, INC.; GRUPO MAGISTERIAL EDUCADORES(AS) 

POR LA DEMOCRACIA, UNIDAD, CAMBIO, MILITANCIA Y ORGANIZACION 

SINDICAL, INC.; UNION NACIONAL DE EDUCADORES Y TRABAJADORES DE 

LA EDUCACION, INC.; MARIA A. CLEMENTE ROSA; JOSE N. TIRADO 

GARCIA, as President of the United Firefighters Union of Puerto 

Rico,

Objectors, Appellees,

VAQUERIA TRES MONJITAS, INC.; BLACKROCK FINANCIAL MANAGEMENT, 

INC.; EMSO ASSET MANAGEMENT LIMITED; MASON CAPITAL MANAGEMENT, 

LLC; SILVER POINT CAPITAL, L.P.; VR ADVISORY SERVICES, LTD; 

AURELIUS CAPITAL MANAGEMENT, LP, on behalf of its managed 

entities; GOLDENTREE ASSET MANAGEMENT LP, on behalf of funds 

under management; WHITEBOX ADVISORS LLC, on behalf of funds 

under management; MONARCH ALTERNATIVE CAPITAL LP, on behalf of 

funds under management; TACONIC CAPITAL ADVISORS L.P., on behalf 

of funds under management; ARISTEIA CAPITAL, LLC, on behalf of 

funds under management; FARMSTEAD CAPITAL MANAGEMENT, LLC, on 

behalf of funds under management; FOUNDATION CREDIT, on behalf 

of funds under management; CANYON CAPITAL ADVISORS LLC, in its 

capacity as a member of the QTCB Noteholder Group; DAVIDSON 

KEMPNER CAPITAL MANAGEMENT LP, in its capacity as a member of 

the QTCB Noteholder Group; SCULPTOR CAPITAL LP, in its capacity 

as a member of the QTCB Noteholder Group; SCULPTOR CAPITAL II 

LP, in its capacity as a member of the QTCB Noteholder Group; 

AMBAC ASSURANCE CORPORATION; ANDALUSIAN GLOBAL DESIGNATED 

ACTIVITY COMPANY; CROWN MANAGED ACCOUNTS, for and on behalf of 

Crown/PW SP; LMA SPC, for and on behalf of Map 98 Segregated 

Portfolio; MASON CAPITAL MASTER FUND LP; OAKTREE-FORREST MULTISTRATEGY, LLC (SERIES B); OAKTREE OPPORTUNITIES FUND IX, L.P.; 

OAKTREE OPPORTUNITIES FUND IX (PARALLEL), L.P.; OAKTREE 

OPPORTUNITIES FUND IX (PARALLEL 2), L.P.; OAKTREE HUNTINGTON 

INVESTMENT FUND II, L.P.; OAKTREE OPPORTUNITIES FUND X, L.P.; 

OAKTREE OPPORTUNITIES FUND X (PARALLEL), L.P.; OAKTREE 

OPPORTUNITIES FUND X (PARALLEL 2), L.P.; OAKTREE VALUE 

OPPORTUNITIES FUND HOLDINGS, L.P.; OCEANA MASTER FUND LTD.; 

OCHER ROSE, L.L.C.; PENTWATER MERGER ARBITRAGE MASTER FUND LTD.; 

PWCM MASTER FUND LTD.; REDWOOD MASTER FUND, LTD.; BANK OF NEW 

YORK MELLON; OFFICIAL COMMITTEE OF UNSECURED CREDITORS; ASSURED 

GUARANTY CORP.; ASSURED GUARANTY MUNICIPAL CORP.; OFFICIAL 

COMMITTEE OF RETIRED EMPLOYEES; NATIONAL PUBLIC FINANCE 

GUARANTEE CORP.; FINANCIAL GUARANTY INSURANCE COMPANY; 

AMERINATIONAL COMMUNITY SERVICES, LLC, as servicer for the GDB 

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Debt Recovery Authority; CANTOR-KATZ COLLATERAL MONITOR LLC, as 

Collateral Monitor for the GDB Debt Recovery Authority; ATLANTIC 

MEDICAL CENTER, INC.; CAMUY HEALTH SERVICES, INC.; CENTRO DE 

SALUD FAMILIAR DR. JULIO PALMIERI FERRI, INC.; CIALES PRIMARY 

HEALTH CARE SERVICES, INC.; CORP. DE SERV. MEDICOS PRIMARIOS Y 

PREVENCION DE HATILLO, INC.; COSTA SALUD, INC.; CENTRO DE SALUD 

DE LARES, INC.; CENTRO DE SERVICIOS PRIMARIOS DE SALUD DE 

PATILLAS, INC.; HOSPITAL GENERAL CASTANER, INC.; GNMA & US 

GOVERNMENT TARGET MATURITY FUND FOR PUERTO RICO RESIDENTS, INC., 

f/k/a Puerto Rico GNMA & U.S. Government Target Maturity Fund, 

Inc.; MORTGAGE-BACKED & US GOVERNMENT SECURITIES FUND FOR PUERTO 

RICO RESIDENTS, INC., f/k/a Puerto Rico Mortgage-Backed & U.S. 

Government Securities Fund, Inc.; PUERTO RICO RESIDENTS BOND 

FUND I, f/k/a Puerto Rico Investors Bond Fund I; PUERTO RICO 

RESIDENTS TAX-FREE FUND, INC., f/k/a Puerto Rico Investors TaxFree Fund, Inc.; PUERTO RICO RESIDENTS TAX-FREE FUND II, INC., 

f/k/a Puerto Rico Investors Tax-Free Fund II, Inc.; PUERTO RICO 

RESIDENTS TAX-FREE FUND III, INC., f/k/a Puerto Rico Investors 

Tax-Free Fund III, Inc.; PUERTO RICO RESIDENTS TAX-FREE FUND IV, 

INC., f/k/a Puerto Rico Investors Tax-Free Fund IV, Inc.; PUERTO 

RICO RESIDENTS TAX-FREE FUND V, INC., f/k/a Puerto Rico 

Investors Tax-Free Fund V, Inc.; PUERTO RICO RESIDENTS TAX-FREE 

FUND VI, INC., f/k/a Puerto Rico Investors Tax-Free Fund VI, 

Inc.; TAX-FREE FIXED INCOME FUND FOR PUERTO RICO RESIDENTS, 

INC., f/k/a Puerto Rico Fixed Income Fund, Inc.; TAX-FREE FIXED 

INCOME FUND II FOR PUERTO RICO RESIDENTS, INC., f/k/a Puerto 

Rico Fixed Income Fund II, Inc.; TAX-FREE FIXED INCOME FUND III 

FOR PUERTO RICO RESIDENTS, INC., f/k/a Puerto Rico Fixed Income 

Fund III, Inc.; TAX-FREE FIXED INCOME FUND IV FOR PUERTO RICO 

RESIDENTS, INC., f/k/a Puerto Rico Fixed Income Fund IV, Inc.; 

TAX-FREE FIXED INCOME FUND V FOR PUERTO RICO RESIDENTS, INC., 

f/k/a Puerto Rico Fixed Income Fund V, Inc.; TAX-FREE FIXED 

INCOME FUND VI FOR PUERTO RICO RESIDENTS, INC., f/k/a Puerto 

Rico Fixed Income Fund VI, Inc.; TAX FREE FUND FOR PUERTO RICO

RESIDENTS, INC., f/k/a Tax-Free Puerto Rico Fund, Inc.; TAX FREE 

FUND II FOR PUERTO RICO RESIDENTS, INC., f/k/a Tax-Free Puerto 

Rico Fund II, Inc.; TAX-FREE HIGH GRADE PORTFOLIO BOND FUND FOR 

PUERTO RICO RESIDENTS, INC., f/k/a Puerto Rico AAA Portfolio 

Bond Fund, Inc.; TAX-FREE HIGH GRADE PORTFOLIO BOND FUND II FOR 

PUERTO RICO RESIDENTS, INC., f/k/a Puerto Rico AAA Portfolio 

Bond Fund II, Inc.; TAX-FREE HIGH GRADE PORTFOLIO TARGET 

MATURITY FUND FOR PUERTO RICO RESIDENTS, INC., f/k/a Puerto Rico 

AAA Portfolio Target Maturity Fund, Inc.; TAX FREE TARGET 

MATURITY FUND FOR PUERTO RICO RESIDENTS, INC., f/k/a Tax-Free 

Puerto Rico Target Maturity Fund, Inc.; UBS IRA SELECT GROWTH & 

INCOME PUERTO RICO FUND; SERVICIOS INTEGRALES EN LA MONTANA 

(SIM),

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Creditors, Appellees,

UNITED STATES,

Respondent, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Laura Taylor Swain,* U.S. District Judge]

Before

Kayatta, Howard, and Thompson,

Circuit Judges.

Guillermo Ramos Luiña for appellants, cross-appellees 

Cooperativa de Ahorro y Crédito Abraham Rosa, Cooperativa de Ahorro 

y Crédito de Ciales, Cooperativa de Ahorro y Crédito de Rincón, 

Cooperativa de Cooperativa de Ahorro de Vega Alta, Crédito Dr. 

Manuel Zeno Gandía, and Cooperativa de Ahorro y Crédito de Juana 

Díaz.

Rafael A. Gonzalez-Valiente, with whom Godreau & Gonzalez 

Law, LLC was on brief, for appellant, cross-appellee Suiza Dairy 

Corporation.

Victor M. Rivera-Rios for appellants, cross-appellees Luis F. 

Pabón Bosques, Raul Martinez Perez, Elvin A. Rosado Morales, Carlos 

A. Rojas Rosario, and Rafael Torres Ramos.

Martin J. Bienenstock, with whom Jeffrey W. Levitan, Mark D. 

Harris, Brian S. Rosen, Ehud Barak, Lucas Kowalczyk, Timothy W.

Mungovan, John E. Roberts, Adam L. Deming, Joseph S. Hartunian, 

and Proskauer Rose LLP were on brief, for appellee, cross-appellant 

the Financial Oversight and Management Board for Puerto Rico.

Peter M. Friedman, with whom John J. Rapisardi, Maria J. 

DiConza, and O'Melveny & Meyers LLP were on brief, for appellees 

Governor Pedro R. Pierluisi and the Puerto Rico Fiscal Agency and 

Financial Advisory Authority.

Ana A. Núñez Velázquez, Aguadilla, PR, Pro Se.

Charles A. Cuprill-Hernández, with whom Charles A. Cuprill, 

* Of the Southern District of New York, sitting by 

designation.

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P.S.C. was on brief, for appellees Oscar Adolfo Mandry Aparicio, 

María del Carmen Amalia Mandry Llombart, Selma Verónica Mandry 

Llombart, María del Carmen Llombart Bas, Oscar Adolfo Mandry 

Bonilla, Gustavo Alejandro Mandry Bonilla, Yvelise Helena 

Fingerhut Mandry; Margaret Ann Fingerhut Mandry, Victor Robert 

Fingerhut Mandry, Juan Carlos Esteva Fingerhut, Pedro Miguel 

Esteva Fingerhut, Mariano Javier McConnie Fingerhut, Janice Marie 

McConnie Fingerhut, Victor Michael Fingerhut Cochran, Michelle 

Elaine Fingerhut Cochran, Rosa Estela Mercado Guzmán, Eduardo José 

Mandry Mercado, Salvador Rafael Mandry Mercado, Margarita Rosa 

Mandry Mercado, and Adrián Roberto Mandry Mercado.

Daniel Winik, Attorney, Civil Division, with whom Brian M. 

Boynton, Principal Deputy Assistant Attorney General, W. Stephen 

Muldrow, United States Attorney, Michael S. Raab, Attorney, Civil 

Division, and Michael Shih, Attorney, Civil Division, were on 

brief, for intervenor, appellee the United States.

Russell A. Del Toro Sosa, with whom David Carrion Baralt was 

on brief, for appellee PFZ Properties, Inc.

Maria Mercedes Figueroa Morgade on brief for appellees 

Demetrio Amador Inc. and Demetrio Amador Roberts.

Alexis Fuentes-Hernández on brief for appellees Maruz Real 

Estate Corp., Lortu-Ta LTD., Inc., La Cuarterola, Inc., Juaza, 

Inc., Frank E. Torres Rodriguez and Eva Torres Rodriguez.

Arturo J. García-Solá, with whom Nayuan Zouairaban and 

McConnell Valdes LLC were on brief, for appellee AmeriNational 

Community Services, LLC.

Douglas I. Koff, with whom Peter Amend, Douglas S. Mintz, and 

Schulte, Roth & Zabel were on brief, for appellee Cantor-Katz 

Collateral Monitor LLC.

Eduardo J. Capdevila-Díaz, with whom Isabel M. FullanaFraticelli and Isabel Fullana-Fraticelli & Assocs., PSC were on 

brief, for appellee Finca Mitilde, Inc.

Carlos Fernandez-Nadal on brief for appellee Jorge Rafael 

Eduardo Collazo Quinones.

Maximiliano Trujillo-González on brief for appellees Manuel 

A. Rivera-Santos, Jorge Rivera-Santos, and Carlos Manuel RiveraSantos.

Juan A. Tapia Ortiz, Brooklyn, NY, Pro Se.

November 23, 2022

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THOMPSON, Circuit Judge. On January 18, 2022, the 

district court entered an Order and Judgment confirming the 

Modified Eighth Amended Title III Joint Plan of Adjustment of the 

Commonwealth of Puerto Rico, the Employees Retirement System of 

the Government of the Commonwealth of Puerto Rico, and the Puerto 

Rico Public Buildings Authority ("the Confirmation Order") as well 

as Findings of Fact and Conclusions of Law in Connection with the 

Confirmation Order ("the FF/CL"). As the full name of the 

Confirmation Order suggests, this final debt restructuring plan 

was the product of progressive iterations about how to resolve the 

initial petition for debt restructuring, filed in May 2017 by 

Puerto Rico's Financial Oversight and Management Board ("the 

Board") on behalf of the Commonwealth of Puerto Rico and several 

of the Commonwealth's agencies and instrumentalities pursuant to

Title III of the Puerto Rico Oversight, Management, and Stability 

Act ("PROMESA"). Several creditors filed a notice of appeal to 

challenge the Confirmation Order and the FF/CL. This court

consolidated the appeals for briefing and oral argument pursuant 

to Rule 3(b)(2) of the Federal Rules of Appellate Procedure. This 

opinion resolves the appeal filed by a group of six Credit Unions 

(also often referred to as "cooperatives" or "cooperativas"), each 

of whom filed a proof of claim in this Title III case and then 

jointly filed objections to the evolving plan for restructuring 

the Commonwealth's debts (details about the bases for their joint 

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objections to come in a moment). As we explain below, the Credit 

Unions' challenge to the district court's rejection of their 

objections is now moot. Before we explain why, we need to 

introduce the companion adversary proceeding.1 

Almost a year after the Commonwealth filed its initial 

Title III petition, the Credit Unions initiated an adversary 

proceeding claiming that the Commonwealth and several of its 

agencies and instrumentalities defrauded them into purchasing 

worthless bonds as well as compelled them to invest in these 

security instruments such that a taking without just compensation 

had occurred in violation of the U.S. Constitution's Fifth 

Amendment.2 The Credit Unions alleged that these claims of 

misconduct should render their creditor claims in the bankruptcy 

proceeding non-dischargeable pursuant to 11 U.S.C. §§ 105 and 944 

and PROMESA. 

While their adversary complaint was pending, the Credit 

Unions filed joint objections to the Seventh Amended Title III 

Joint Plan of Adjustment and to the Revised Eighth Amended Plan of 

1 "[A]n adversary proceeding is a subsidiary lawsuit within 

the larger framework of a bankruptcy case." In re Fin. Oversight

& Mgmt. Bd. for P.R., 872 F.3d 57, 63 (1st Cir. 2017) (alteration 

in original) (quoting Kowal v. Malkemus (In re Thompson), 965 F.2d 

1136, 1140 (1st Cir. 1992)); see also Fed. R. Bankr. P. 7001 (which 

48 U.S.C. § 2170 says shall apply to PROMESA cases).

2 In the adversary proceeding, the Credit Unions also alleged 

some Commonwealth-statute-based fraud and negligence claims.

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Adjustment, arguing that their claims for fraud and 

unconstitutional takings in their adversary action against the 

debtors should be explicitly excepted from discharge pursuant to 

11 U.S.C. § 944(c)(1). 

Meanwhile, back in the docket of the adversary 

proceeding, the defendants filed motions to dismiss the Credit 

Unions' second amended complaint. In late December 2021, the 

district court granted the motions, concluding that most of the

Credit Unions' claims sounded in fraud but failed to meet the 

heightened pleading standard for claims based in fraud, that the 

plaintiffs failed to state a plausible takings claim, and that 

some of the claims against some of the defendants lacked subject 

matter jurisdiction because the claim was either not yet ripe or 

had overripened such that the claim was now moot. See In re Fin.

Oversight & Mgmt. Bd. for P.R., 578 F. Supp. 3d 267 (D.P.R. 2021). 

The Credit Unions appealed.

While the Credit Unions' appeal from the dismissal of 

their adversary proceeding was in the briefing stage here, the

district court entered the Confirmation Order and the FF/CL. The 

district court summarily overruled the Credit Unions' joint 

objection to the plan: 

[F]or the reasons set forth in th[e] [c]ourt's

Memorandum Opinion Granting Defendants' Motions to 

Dismiss Second Amended Complaint . . . , the [c]ourt 

overrules the objection of [the Credit Unions] to the 

extent it incorporates the allegations set forth in 

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their adversary complaint, which has now been dismissed 

without leave to amend, alleging that their claims are 

protected by the Takings Clause. Because the [c]ourt 

has concluded that the Credit Unions have not stated a 

claim upon which relief could be granted under the 

Takings Clause, the [c]ourt finds that their claims for 

payment concerning that alleged taking are not protected 

by the Fifth Amendment and may be impaired and discharged 

by the Plan. Moreover, to the extent the Credit Unions 

have asserted a claim that approval of the Plan itself 

would constitute a taking, the Credit Unions' objection 

is also overruled for the reasons discussed in 

connection with the objections of other bondholders 

. . . .

The Credit Unions appealed both the Confirmation Order and the 

FF/CL, arguing the district court was wrong to overrule their 

objections to the proposed plans of adjustment when their appeal 

from the dismissal of their adversary proceeding -- which they say 

would result in a revival of nondischargeable claims against the 

Commonwealth -- was still pending in this court. Indeed, their 

arguments in this appeal focus exclusively on why their fraud and 

takings claims should have survived the adversary defendants' 

motions to dismiss as well as why the district court should have

excepted these (according to the Credit Unions) soon-to-bemeritorious claims from discharge.3

3 Neither the Confirmation Order nor the FF/CL explicitly 

mentions the Credit Unions' objections to the proposed plan of 

adjustment based on their fraudulent conduct claims or their 

arguments about why their fraud-based claims should be excepted 

from discharge. The Credit Unions do not argue, however, that the 

district court's silence in the FF/CL and the Confirmation Order 

about these claims was an error.

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In an opinion issued today, we affirmed the district 

court's dismissal of the adversary proceeding, concluding that the 

Credit Unions failed to plausibly plead both their fraud-based and 

takings claims.4 See In re Fin. Oversight & Mgmt. Bd. for P.R., 

No. 22-1048, ___ F.4th ___ (1st Cir. 2022). 

Because we have now affirmed the dismissal of the Credit 

Unions' adversary claims, we find ourselves with nothing left to 

decide in this appeal from the Confirmation Order and the FF/CL 

because the Credit Unions no longer have pending adversary claims 

that the district court could except from discharge. The Credit 

Unions' arguments about why they say their adversary claims should 

have progressed beyond the pleadings stage are moot, and we 

therefore need not address their arguments about whether fraud 

claims are dischargeable pursuant to PROMESA. See Bos. Bit Labs, 

Inc. v. Baker, 11 F.4th 3, 8 (1st Cir. 2021) ("[I]f a case loses 

its live-controversy character at any point in the proceedings, 

the mootness doctrine generally stops us from pumping new life 

into the dispute . . . by 'ousting' the federal courts of 

'jurisdiction' and 'requir[ing]' us to 'dismiss[]' the case." 

4 In addition, we affirmed the dismissal of the Commonwealthstatute-based negligence claims as time-barred, and the Credit 

Unions' belated challenge to an earlier Government Development 

Bank debt modification plan as moot. See In re Fin. Oversight &

Mgmt. Bd. for P.R., No. 22-1048, ___ F.4th at ___.

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(second and third alterations in original) (quoting Deposit Guar. 

Nat'l Bank v. Roper, 445 U.S. 326, 335 (1980))).

The Credit Unions' appeal from the Confirmation Order 

and the FF/CL is dismissed. 

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