IN THE UNITED STATES DISTRICT COURT

FOR THE 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

Court Filing Relates Only to 

PREPA and Shall Only Be Filed 

in Case No. 17 BK 4780-LTS and 

Main Docket 17 BK 3283-LTS

RESPONSE BY THE AD HOC GROUP OF PREPA BONDHOLDERS, 

ASSURED GUARANTY CORP., ASSURED GUARANTY MUNICIPAL CORP., 

NATIONAL PUBLIC FINANCE GUARANTEE CORPORATION, AND 

SYNCORA GUARANTEE INC. TO THE MEDIATION TEAM’S NOTICE

AND PROPOSED AMENDED ORDER

In response to the Notice of Mediation Team’s Proposed Amended Order Establishing 

Terms and Conditions of Mediation [ECF No. 2997] (the “Mediation Team Notice”) and the 

 

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 

(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).

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Mediation Team’s Proposed Amended Order Establishing the Terms and Conditions of Mediation 

[ECF No. 2996], the PREPA Bondholders2submit the following: 

1. The PREPA Bondholders appreciate the Mediation Team’s considerable efforts to 

date and welcome the judges’ willingness to continue working with the parties to achieve an 

agreement. The PREPA Bondholders agree in most respects with the Mediation Team’s suggested 

approach and proposed order.

2. The PREPA Bondholders support requiring the Oversight Board to promptly file a 

plan and disclosure statement and to seek plan confirmation within nine months. This will enhance 

the prospects of a global agreement among the parties. Mediation Team Notice at 2-3. Placing 

this case on a path to resolve the question of what PREPA can afford to pay its creditors, under a 

plan that satisfies confirmation requirements, is critical to the parties’ ability to make further 

progress in their discussions and bring this long-pending case to a conclusion within a year.

3. Similarly, Bondholders agree that litigation over the Bond Issues can and should 

proceed, if at all, in the context of the Oversight’s Board’s request for confirmation of an actual 

plan to adjust PREPA’s debts. See id. The Oversight Board can, if necessary, propose a “Toggle 

Plan” reflecting PREPA’s alternative treatments of claims depending on how the Court resolves 

that litigation in connection with its decision whether to confirm a plan. Id. Doing otherwise 

would unnecessarily delay the final resolution of this five-year-old case while prolonging the high 

costs that these proceedings are imposing on the people of Puerto Rico—in particular the costs of 

the grid-reconstruction delays described in the PREPA Bondholders’ Response to the FOMB’s 

Urgent Motion [ECF No. 2296] at ¶¶ 4-5 (“Bondholders’ Scheduling Response”).

 

2 Capitalized terms not otherwise defined have the meaning assigned to them in PREPA Bondholders’ Response to 

the Oversight Board’s Urgent Motion to Set a Litigation Schedule. See ECF No. 2966. 

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4. The PREPA Bondholders further agree with the Mediation Team that this Court 

can consider their Motion to Dismiss/Lift-Stay before the confirmation hearing. See Mediation 

Team Notice at 3 n.4. As previously explained, cause to dismiss this case or to lift the stay is 

evident on the existing clear record of undue delay and failure to prosecute and could be decided 

without discovery or testimony. See Bondholders’ Scheduling Response ¶¶ 34-35. Either 

dismissing this case or lifting the automatic stay will allow the PREPA Bondholders to seek the 

appointment of a receiver for PREPA now. A receiver’s statutory authority will allow it to cut 

through the political morass, obtain reasonable rates, hasten the reconstruction of PREPA’s 

electricity grid, and transform its operations—goals that neither Puerto Rico nor the Oversight 

Board have been able to achieve to date.3 If the motion to dismiss is granted, then that will moot 

any litigation over the Bond Issues. If, however, the Court is not inclined to proceed with the 

Motion to Dismiss/Lift-Stay for an immediate hearing (e.g., due to factual issues), then discovery 

on the issues raised by that Motion should commence promptly.

5. The Court should reject out of hand the absurd (and belated) argument that the Trust 

Agreement restricts Bondholders’ recourse to only the few million dollars that PREPA happened 

to have on deposit in a single account on the petition date. Indeed, the Board itself characterized 

a similar non-recourse argument in HTA as “fallacious,” see Bondholders’ Scheduling Response 

¶ 45, which undoubtedly is why the Board declined to pursue this claim for the preceding five 

years that this Title III case has been pending. But if full litigation is required on what amounts to 

an attack on almost all of the PREPA Bondholders’ claims, then Bondholders need to obtain 

information and testimony on, among other things, the diversion of funds contrary to the 

 

3 A PREPA receiver will have the statutory authority to seek rates at the “necessary, proper and reasonable” level and 

to “maintain, restore, insure, and keep insured” PREPA’s infrastructure. 22 L.P.R. § 207(a), (b).

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transaction documents, contemporaneous disclosures, market conventions, and PREPA’s flows of 

funds among various accounts before and after the petition date. Addressing the non-recourse 

claim also will require litigation of the bondholders’ counterclaims or third-party claims for 

breaches of the Trust Agreement, unlawful Takings, and other related causes of action. These 

overlapping issues should be decided at confirmation with the benefit of a full record and in 

connection with other plan-related disputes.

6. Finally, the PREPA Bondholders have no objection to the entry of the Mediation 

Team’s Proposed Amended Order [ECF No. 2996] in conjunction with setting deadlines for the 

Oversight Board to propose a plan and proceed with seeking that plan’s June 2023 confirmation.

7. In sum, the PREPA Bondholders are hopeful that the Mediation Team’s proposal, 

if adopted, will encourage meaningful engagement between the parties and result in a successful 

mediation that allows PREPA to finally exit bankruptcy without years of litigation and additional 

delay in PREPA’s operational restructuring.

We hereby certify that, on this same date, we electronically filed the foregoing with the 

clerk of the Court using the CM/ECF system, which will notify the attorneys of record.

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RESPECTFULLY SUBMITTED, 

In San Juan, Puerto Rico, today September 23, 2022. 

TORO COLÓN MULLET P.S.C.

P.O. Box 195383

San Juan, PR 00919-5383

Tel.: (787) 751-8999

Fax: (787) 763-7760

/s/ Manuel Fernández-Bared

MANUEL FERNÁNDEZ-BARED 

USDC-PR No. 204,204

E-mail: mfb@tcm.law

/s/ Linette Figueroa-Torres 

LINETTE FIGUEROA-TORRES

USDC-PR No. 227,104

E-mail: lft@tcm.law

/s/ Nayda Perez-Roman

NAYDA PEREZ-ROMAN

USDC–PR No. 300,208

E-mail: nperez@tcm.law 

Counsel for the Ad Hoc Group of PREPA 

Bondholders

KRAMER LEVIN NAFTALIS & 

FRANKEL LLP

1177 Avenue of the Americas

New York, New York 10036

Tel.: (212) 715-9100

Fax: (212) 715-8000

/s/ Alice J. Byowitz

AMY CATON*

THOMAS MOERS MAYER*

ALICE J. BYOWITZ*

GARY A. ORSECK**

MATTHEW M. MADDEN**

Email: acaton@kramerlevin.com

tmayer@kramerlevin.com 

abyowitz@kramerlevin.com

gorseck@kramerlevin.com

mmadden@kramerlevin.com

* Admitted Pro Hac Vice

** Pro Hac Vice Admission Pending

Counsel for the Ad Hoc Group of 

PREPA Bondholders4

 

4 Syncora Guarantee Inc. joins this motion through its owners, funds, and accounts managed by GoldenTree Asset 

Management, LP, a member of the Ad Hoc Group.

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CASELLAS ALCOVER & BURGOS P.S.C.

By: /s/ Heriberto Burgos Pérez

Heriberto Burgos Pérez

USDC-PR No. 204,809

Ricardo F. Casellas-Sánchez

USDC-PR No. 203,114

Diana Pérez-Seda

USDC–PR No. 232,014

P.O. Box 364924

San Juan, PR 00936-4924

Tel.: (787) 756-1400

Fax: (787) 756-1401

E-mail: hburgos@cabprlaw.com 

 rcasellas@cabprlaw.com

 dperez@cabprlaw.com 

Counsel for Assured Guaranty Corp. and Assured 

Guaranty Municipal Corp.

CADWALADER, WICKERSHAM & 

TAFT LLP

By: /s/ Howard R. Hawkins, Jr.

Howard R. Hawkins, Jr.* 

Mark C. Ellenberg* 

Casey J. Servais* 

William J. Natbony*

Thomas J. Curtin*

200 Liberty Street

New York, New York 10281

Tel.: (212) 504-6000

Fax: (212) 406-6666

Email: howard.hawkins@cwt.com

 mark.ellenberg@cwt.com 

 casey.servais@cwt.com

 bill.natbony@cwt.com

 thomas.curtin@cwt.com

 

* Admitted pro hac vice 

Counsel for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp.

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ADSUAR MUÑIZ GOYCO

SEDA & PÉREZ-OCHOA, P.S.C.

By: /s/ Eric Pérez-Ochoa 

Eric Pérez-Ochoa

(USDC-PR No. 206314)

Luis Oliver-Fraticelli

(USDC-PR No. 209204)

Alexandra Casellas-Cabrera

(USDC-PR No. 301010)

PO BOX 70294

San Juan, PR 00936

Telephone: 787.756.9000

Facsimile: 787.756.9010

Email: epo@amgprlaw.com

 loliver@amgprlaw.com

acasellas@amgprlaw.com

Attorneys for National Public Finance

Guarantee Corporation

WEIL, GOTSHAL & MANGES LLP

By: /s/ Robert Berezin 

Kelly DiBlasi (admitted pro hac vice)

Jonathan Polkes (admitted pro hac vice)

Gregory Silbert (admitted pro hac vice)

Robert Berezin (admitted pro hac vice)

767 Fifth Avenue

New York, New York 10153

Telephone: (212) 310-8000

Facsimile: (212) 310-8007

Email: kelly.diblasi@weil.com

jonathan.polkes@weil.com

gregory.silbert@weil.com

robert.berezin@weil.com

Gabriel A. Morgan (admitted pro hac vice)

700 Louisiana Street, Suite 1700

Houston, TX 77002

Telephone: (713) 546-5000

Facsimile: (713) 224-9511

Email: gabriel.morgan@weil.com

Attorneys for National Public Finance

Guarantee Corporation

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