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.

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In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of

PUERTO RICO ELECTRIC POWER

AUTHORITY (“PREPA”)

Debtor.1

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PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

PROMESA

Title III

No. 17 BK 4780-LTS

Re: 17-BK-04780-LTS, ECF No. 

3130 

JOINT STATUS REPORT PURSUANT TO JUNE 29, 2022 RULING 

DENYING COBRA ACQUISITIONS LLC’S MOTION TO LIFT STAY ORDER

 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 (Bankruptcy Case No. 17-BK-3284-LTS) (Last Four Digits of Federal Tax ID: 8474); (iii) 

Puerto Rico Highways and Transportation Authority (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 

(Bankruptcy Case No. 17-BK-3566-LTS) (Last Four Digits of Federal Tax ID: 9686); (v) Puerto Rico Electric Power 

Authority (Bankruptcy Case No. 17-BK-4780-LTS) (Last Four Digits of Federal Tax ID: 3747); and (vi) Puerto Rico 

Public Buildings Authority (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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To the Honorable United States District Judge Laura T. Swain:

The Puerto Rico Electric Power Authority (“PREPA”), by and through the Financial 

Oversight and Management Board for Puerto Rico (the “Oversight Board”), as the Debtor’s Title 

III representative pursuant to section 315(b) of the Puerto Rico Oversight, Management, and 

Economic Stability Act (“PROMESA”), the Puerto Rico Fiscal Agency and Financial Advisory 

Authority (“AAFAF” and, together with PREPA and the Oversight Board, the 

“Government Parties”) and Cobra Acquisitions LLC (“Cobra” and, together with the Government 

Parties, the “Parties”), respectfully submit this joint Status Report pursuant to the Court’s oral 

ruling denying Cobra Acquisitions LLC’s Motion to Lift Stay Order, made on June 29, 2022,2

which directed the Parties to file a status report. The Parties respectfully state as follows: 

I. Background

1. On June 7, 2022, Cobra filed a motion to lift the stay [ECF No. 2841] (the “June 

2022 Lift Stay Motion”) applicable to its Motion for Allowance and Payment of Administrative 

Expense Claims, dated September 30, 2019 [Case No. 17-3283, ECF No. 8789] (the 

“Administrative Expense Motion”). The Government Parties opposed the 2022 Lift Stay Motion

[ECF No. 2848].

2. On June 29, 2022, after oral argument at the omnibus hearing held that day, the 

Court denied Cobra’s June 2022 Lift Stay Motion and directed the Parties to file this Status Report. 

See June 29, 2022 Hr’g Tr. at 41:15-19. 

II. Status Regarding FEMA Review

3. As of June 2022, the last time the parties briefed the Court, FEMA had completed 

its eligibility analysis of costs claimed under the first contract executed between PREPA and Cobra 

 2 Docket numbers refer to Case No. 17-4780 unless otherwise noted.

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(the “First Contract”) and was completing its eligibility analysis of costs claimed under the second 

contract executed between PREPA and Cobra (the “Second Contract”). At that time, on May 31, 

2022, FEMA had issued a First Appeal Decision on PREPA’s administrative appeal, which PREPA 

had prepared with Cobra’s cooperation, of FEMA’s de-obligation of approximately $46 million in 

costs under the First Contract pursuant to a determination memorandum (“DM”) issued in May 

2021. In the First Appeal Decision, FEMA partially granted the appeal, approving $24.4 million 

in previously denied reimbursement, but maintaining denial of the approximately $21.5 million 

remaining. PREPA subsequently submitted a request for arbitration to the U.S. Civilian Board of 

Contract Appeals (“CBCA”) challenging FEMA’s denial of this remaining $21.5 million. Below 

is an update on progress with the FEMA review process for both contracts since the last hearing 

on this matter.

A. First Contract

4. With respect to the First Contract, on June 29, 2022, PREPA sought arbitration 

before the CBCA. After briefing by both PREPA and FEMA, on November 16, 2022, the CBCA 

determined $21.5 million in costs claimed were ineligible for FEMA reimbursement, because they 

were not payable under the First Contract. Cobra had charged PREPA for most of the costs at 

issue, approximately $21.4 million, as a “daily minimum amount” during the period October 25, 

2017 to November 11, 2017, before Cobra’s lineworkers had arrived in Puerto Rico. The CBCA 

determined that this amount is ineligible because the First Contract had other payment mechanisms 

in place to compensate Cobra during this time (i.e., mobilization costs and a deposit). In the Matter 

of Puerto Rico Electric Power Authority, CBCA 7467-FEMA (Nov. 25, 2022) at 4.

3

 The CBCA 

 3 The CBCA Decision is available at https://www.cbca.gov/files/decisions/2022/SHERIDAN_11-25-22_7467-

FEMA__PUERTO_RICO_ELECTRIC_POWER_AUTHORITY.pdf.

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also determined that $133,800 Cobra charged for apartments was not payable under the First 

Contract, because PREPA paid for berthing barges to lodge Cobra’s personnel and the costs for 

apartments “were not authorized” under “the plain language of the contract.” (id. at 4). The 

CBCA’s decision is final. Also, because this $21.5 million amount represents costs FEMA had 

already obligated and paid to the grant recipient, Central Office of Response, Recovery, and 

Resilience (COR3), which in turn disbursed the funding to PREPA, which in turn paid Cobra, the 

result of the CBCA’s decision is that FEMA will automatically claw back the funding from 

COR3’s federal bank account and PREPA now owes this amount back to COR3, which COR3 will 

likely recoup through setoff against other Public Assistance obligations for PREPA.

5. There are two other cost items that remain at issue under the First Contract: taxes 

and interest. The First Contract contained a “tax gross up” or “TGU” provision, which provides 

that PREPA will pay taxes exceeding 8.5% that the Puerto Rico government imposes on Cobra and 

Cobra pays related to the work performed under the First Contract. FEMA has determined that 

TGU reimbursement eligibility requires the TGU to be related to otherwise FEMA-eligible costs. 

PREPA and Cobra disagree as to the correct amount of TGU and have been exchanging 

information in an attempt to reconcile the discrepancy. Cobra has invoiced PREPA more than 

$77 million in TGU of which PREPA has paid nearly $16 million.

6. As to interest, as of October 2022, Cobra has invoiced PREPA for approximately 

$61.5 million in interest under the First Contract. PREPA disputes Cobra’s interest demand and 

calculations. Among other issues, PREPA disputes (a) Cobra charging interest on amounts FEMA 

found were not properly billable under the First Contract and (b) Cobra compounding interest. 

FEMA will not reimburse interest on late payments.

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B. Second Contract

7. With respect to the Second Contract, FEMA has recently issued two DMs for the 

project worksheets formulated to capture costs of the Second Contract. Project Worksheet (PW) 

466 (also referred to as Grants Manager Project (GMP) 49848) captures cost under the Second 

Contract reimbursed at 100% federal share while GMP 49831 captures costs under the Second 

Contract reimbursed at 90% federal share.4

 

8. FEMA issued a DM on November 21, 2022 for PW 466 / GMP 49848, stating a 

separate DM would follow for GMP 49831. In the November 2022 DM, FEMA determined 

$5,599,775.33 in costs are ineligible for reimbursement, because the costs “are not supported by 

the terms of [the Second Contract] and/or cannot be tied to the performance of eligible work.” 

(DM at 8 of 11). More specifically, FEMA determined:

(1) $779,638.16 for environmental remediation activities Cobra performed were ineligible 

because Cobra was required to perform the work under the First Contract and was not 

authorized to perform the work under the Second Contract; (DM at 4-5 of 11)

(2) $753,954.44 in labor costs were ineligible, because Cobra’s personnel were engaged in 

training activities, which are indirect costs or general/administrative expenses included 

in daily rates and the activities were not required as a direct result of the disaster; (DM 

at 4-5 of 11)

(3) $2,364,148.05 in labor costs were ineligible, because Cobra’s personnel were 

performing various maintenance activities included in the contract equipment rates, so 

FEMA determined the costs to be duplicative; further, FEMA determined the contract 

required Cobra to supply the necessary equipment and thus the costs of doing so are 

rightly borne by Cobra (DM at 7-8 of 11); and 

 4 A summary of all FEMA projects for Cobra-related costs is provided in the chart below:

PW No. GMP No. Contract Date Range of Costs Incurred Cost Share

251 49797 First Contract October 19, 2017 to July 20, 2018 100%

466 49848 Second Contract July 21, 2018 to August 16, 2018 100%

N/A 49831 Second Contract Aug. 17, 2018 to May 26, 2019 90%

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(4) $2,454,001.19 in costs were ineligible for days when Cobra did not perform work on 

the grid. FEMA determined the Second Contract “does not support the billing or 

payment of costs for labor and equipment not actively engaged in work necessary to 

carry out any SOW sub-projects.” (DM at 8 of 11).

9. For PW 466 / GMP 49848, FEMA determined $49,278,986.07 in costs to be 

eligible and determined that $5,599,775.33 is ineligible and not properly payable under the Second 

Contract. PREPA will review the DM and to the extent there is a plausible case for an appeal 

intends to file a first-level administrative appeal of FEMA’s $5.6 million denial by January 20, 

2023.

10. PREPA has already paid Cobra $52,018,933.94 for work associated with 

PW 466 / GMP 49848, which is more than the amount FEMA determined eligible under the 

project. Thus, FEMA’s decision in the November 2022 DM will not result in additional funds to 

PREPA for Cobra-related costs. 

11. FEMA issued another DM relating to GMP 49831, on December 21, 2022. For 

GMP 49831, FEMA determined $233,683,116.76 in costs to be eligible and determined that 

$68,061,726.22 is ineligible for reimbursement because the costs “are not supported by the terms 

of [the Second Contract] and/or cannot be tied to the performance of eligible work.” (DM at 8 of 

11). More specifically, FEMA determined:

(1) $2,379,837.65 in costs for access mapping activities and $2,967,605.62 in 

environmental remediation activities were ineligible because the work was outside the 

scope of the Second Contract and should have been performed under the First Contract. 

(DM 4-5 of 11). FEMA also determined that PREPA only authorized 25% of the access 

mapping work by contract release under the Second Contract; (DM 4-5 of 11)

(2) $12,201,594.89 in costs for work related to distribution feeder line number L2702-01 

were ineligible as duplicative of work performed and reimbursed under PW 251 and 

required as a result of deficiencies or omissions in the prior work; (DM at 5-6 of 11)

(3) $10,947,042.43 in labor costs were ineligible, because Cobra’s personnel were engaged 

in training activities, which are indirect costs or general/administrative expenses 

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included in daily rates and the activities were not required as a direct result of the 

disaster; (DM at 6-7 of 11)

(4) $10,182,641.44 in labor costs were ineligible, because Cobra’s personnel were 

performing various maintenance activities included in the contract equipment rates, so 

FEMA determined the costs to be duplicative; further, FEMA determined the contract 

required Cobra to supply the necessary equipment and thus the costs of doing so are 

rightly borne by Cobra; (DM at 7 of 11)

(5) $4,073,469.84 in costs were ineligible for days when Cobra did not perform work on 

the grid. FEMA determined the Second Contract “do[es] not support the billing or 

payment of costs for labor and equipment that were not actively engaged in work 

necessary to carry out any SOW sub-projects”; (DM at 7-8 of 11) and 

(6) $25,309,534.35 in demobilization costs billed to PREPA based on the blended daily 

labor rates were ineligible, because the Second Contract requires demobilization to be 

reimbursed at cost, not based on blended rates. Accordingly, FEMA determined “[i]n 

the absence of documentation to support the actual costs of demobilization payable 

under [the Second Contract], FEMA is, at this time, disallowing all demobilization 

costs that were billed to PREPA based on the daily blended T&D linemen rate formula.” 

(DM at 8 of 11).

12. PREPA will review the DM and, to the extent there is a plausible case for an appeal,

intends to file a first-level administrative appeal of FEMA’s decision by February 19, 2023.

13. FEMA has determined eligible $233,683,116.76 in costs under GMP 49831, which 

PREPA expects will be soon obligated at a 90% federal cost share—$210,314,805.09. PREPA has 

already paid Cobra $150,019,861.82 invoiced under this project,5 of which FEMA determined 

eligible $123,492,481.52 (90% cost share = $111,143,233.37) and $26,527,380.30 FEMA 

determined ineligible. Thus, $111,143,233.37 of FEMA’s obligation resulting from this DM will 

be available to PREPA as reimbursement for payments it already made to Cobra. The remaining 

$99,171,571.72 (less $21.5 million owed to COR3 on the First Contract as a result of the CBCA 

ruling) will be available to for Cobra’s outstanding invoices. PREPA asserts it may offset the 

 5 This number is according to FEMA’s “Summary of Invoice Payment Status” provided with the DM. 

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amounts FEMA denied under PW 251 and the CBCA confirmed are not allowed under the First 

Contract against valid amounts due to Cobra under the First or Second Contract.

14. Unlike the First Contract, the Second Contract does not include a TGU provision, 

so there are no open issues between the Parties as to PREPA’s liability for Cobra’s taxes under the 

Second Contract.

15. Like the First Contract, PREPA’s liability for and the amount of interest Cobra 

claims is disputed. As of October 2022, Cobra has invoiced PREPA nearly $83.4 million in interest 

under the Second Contract. As noted above, PREPA disputes Cobra’s interest demand and 

calculations. The Second Contract is silent as to the method of calculating interest.

16. FEMA has now issued DMs on all three of PREPA’s Cobra-related projects. The 

outcomes thus far are summarized below:

Project Amount Cobra 

Invoiced 

Amount Paid by 

PREPA Unpaid Amounts

Amount FEMA 

Determined 

Eligible

Amount FEMA 

Denied as 

Ineligible

Status

251 $869,475,849.566 $877,074,630.487 TGU & Interest 

Only $846,424,762.018 $21,585,072.51

CBCA 

concurred 

with FEMA’s 

denial.

466 / 49848 $57,672,357.729 $52,018,933.94 $5,653,423.78 + 

Interest $49,278,986.07 $5,599,775.33

First Appeal 

Due Jan. 20, 

2023

49831 $307,272,412.6511 $151,024,803.5710 $156,702,609.08 

+ Interest $233,683,116.76 $68,061,726.22

First Appeal 

Due Feb. 19, 

2023

17. With the exception of interest invoices under the First and Second Contracts (which 

is not reimbursable), PREPA has submitted all Cobra’s invoices to FEMA for reimbursement. 

 6 Excludes $77,460,241.80 in TGU and $61,486,867.47 in interest (as of October 2022).

7 Excludes $15,966,377.24 in TGU PREPA has paid to Cobra.

8 Excludes $76,717,644.43 in TGU included by FEMA in its determination of eligible costs, but which will be further 

validated by FEMA at closeout and remain obligated only if PREPA can demonstrate to FEMA through 

documentation the actual amount of taxes Cobra paid to the Government of Puerto Rico in excess of 8.5%.

9 Excludes interest. Cobra has invoiced $83,368,231.96 in interest under the Second Contract as of October 2022.

10 See n.9, supra.

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PREPA has now received a final, nonappealable determination regarding these costs under the First 

Contract, and FEMA’s initial DMs regarding these costs under the Second Contract. 

III. Status of the Criminal Proceedings

18. With respect to the proceedings in the Criminal Case,11 at the time of the last update 

to the Court, a sentencing hearing for the two remaining defendants who had pled guilty, Ahsha

Tribble and Keith Ellison, had been scheduled for August, 2022. That hearing was rescheduled 

and held on December 13, 2022 (the “Sentencing Hearing”). See Criminal Case [ECF Nos. 301, 

303]. At the Sentencing Hearing, statements in support of mitigation of punishment were 

presented on behalf of the Defendants. Id. Defendants’ allocutions and the U.S. Government’s 

statements were heard. Id. Defendants Tribble and Ellison each received a sentence including six 

(6) months plus one (1) day imprisonment each, and a fine of $15,000 and $20,000, respectively. 

Id. The Parties are attempting to obtain a transcript of the Sentencing Hearing to confirm

statements made on the record and whether they may have contained facts relevant to adjudicating 

the Administrative Expense Motion.

IV. Parties’ Positions

a. Government Parties’ Position

19. The Government Parties respectfully submit the stay in this matter should remain 

in effect through at least July 31, 2022, to provide time for the parties to work collaboratively to 

appeal the November and December DMs regarding the Second Contract and to pursue a potential 

settlement of the remaining disputes. The continued stay will also allow the Oversight Board and 

PREPA to focus their efforts on prosecuting confirmation of PREPA’s plan of adjustment, which 

 11 United States v. Tribble et al., Case No. 19-CR-541-FAB (D.P.R.).

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will be an all-consuming task through the conclusion of the confirmation hearing currently 

proposed to be scheduled for July 17-21 and July 24-28, 2023. See [ECF No. 3114] at ¶ 25.

20. Allowance of Cobra’s claim is not a gating item for PREPA’s plan confirmation 

process; therefore, the continued stay will not obstruct confirmation. Any allowance determination 

is not necessary to inform the feasibility of the PREPA plan, as the Government Parties continue 

to expect a substantial amount of any allowed claim would be covered by FEMA reimbursements. 

Moreover, the Oversight Board has filed a plan that would provide sufficient funds to cover the 

full unpaid amount of Cobra’s claim, if allowed. On December 16, 2022, the Oversight Board 

filed a plan of adjustment [ECF No. 3110] (the “PREPA Plan”) that proposes to provide $400 

million for the payment of administrative expense claims, which in addition to any FEMA funding 

(a substantial amount of which we now know PREPA should receive), will be available to pay any

of Cobra’s allowed claim. PREPA Plan Arts. I.A.8, XVI.H. This is well in excess of Cobra’s 

asserted $368 million claim,12 even if the full amount were allowable, which PREPA disputes on 

various grounds. Because Cobra’s claim need not be paid or reserved for until the effective date 

of a PREPA Plan, the claim need not yet be liquidated. Regardless, feasibility is properly addressed 

at confirmation. See August 2021 Stay Order [ECF No. 2590] at 5 (“PREPA’s ability to fund a 

reserve or resolve the claim, and issues regarding the appropriate magnitude of the claim, can be 

addressed in the context of confirmation . . . .”).

21. With respect to the Second Contract, PREPA is carefully reviewing the DMs and,

to the extent there is a plausible case for an appeal, intends to file a first-level administrative appeal. 

Based on statutory and regulatory deadlines for the appeal process, FEMA’s decision on PREPA’s 

 12 See Cobra Acquisitions LLC’s Statement Regarding the Order (A) Granting in Part and Denying in Part Urgent 

Motion of Financial Oversight and Management Board for Order (I) Establishing Schedule to Continue Negotiations 

During Litigation of Gating Issues Pursuant to Litigation Schedule and (II) Granting Related Relief and (B) Staying 

Certain Motions Filed by PREPA Bondholders [ECF No. 3103] at 2. 

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First Appeals would be due in June and July 2023. Upon receipt of each decision, if FEMA 

continues to deny eligibility, PREPA would have 60 days to file a second-level administrative 

appeal to FEMA or a Request for Arbitration with the CBCA. During this time PREPA will review 

the outcome of the appeals, confer with Cobra and the Oversight Board, and determine, among 

other things, the most prudent next steps. If FEMA adheres to its statutory deadline for deciding 

the First Appeals and PREPA pursues arbitration in lieu of Second Appeals (from FEMA denial of 

all or part of the First Appeals), the CBCA would likely issue a final decision in December 2023 

and January 2024 for each of the projects under the Second Contract.

22. The Government Parties respectfully submit that preservation of PREPA’s public 

resources—and the Court’s resources—continue to weigh in favor of a reasonable continued stay 

through July 31, 2023. Rather than litigating facts and legal matters that the appeals process or 

subsequent negotiation between the parties may resolve, PREPA’s resources are better used in 

analyzing the final conclusions on the Second Contract and exploring consensual resolution,

without the costs and burdens of litigation. See June 29, 2022 Hr’g Tr. at 41:3-8 (“the public 

interest in this particular setting of a Title III bankruptcy is one that the public entity defendant has 

presumably also weighed in determination as to the risks and benefits of expending public 

resources on potentially unnecessary and potentially duplicative litigation of this particular 

claim.”).

23. Permitting such processes’ completion has proven to be a prudent course of action. 

As detailed above, with respect to the First Contract, FEMA had originally de-obligated 

approximately $46 million. PREPA, in collaboration with Cobra, appealed that decision, resulting 

in the re-obligation of approximately $24.4 million and substantially narrowing the remaining 

disputes under the First Contract that would otherwise have had to be litigated. As Cobra itself 

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calculates, nearly 50% of the amounts Cobra asserts have been de-obligated and are disputed. The 

Government Parties respectfully submit PREPA’s appeal rights will help further narrow the 

remaining disputes under the Second Contract, and thus likewise merit further time without 

resorting to litigation in this Court at this time. Importantly, the Oversight Board submits PREPA’s 

resources should not be distracted litigating Cobra’s claims in light of the status of the dispute as 

described above.

24. The Government Parties respectfully submit that final determination by this Court 

of all amounts allegedly due pursuant to Cobra’s claims should not be made until after all appeals 

of FEMA’s DMs are resolved. Many of the amounts FEMA de-obligated are based on FEMA’s 

conclusion that the costs were not validly owed under the relevant contract. If those conclusions 

are correct, they equally apply to PREPA’s obligation to pay Cobra, not just FEMA’s obligation 

to reimburse PREPA. While those determinations may not be binding on this Court, the 

Government Parties believe they are relevant to the Court’s consideration of Cobra’s claims and, 

at a minimum, PREPA should be allowed the opportunity to consider the final rulings on the DMs 

in formulating its objections to Cobra’s claims.

25. Moreover, if PREPA were required to litigate objections to Cobra’s administrative 

claim at this time, while it is analyzing and possibly proceeding with an appeal of the two DMs on 

the Second Contract, it could be compelled to take opposite positions regarding some or all of the 

approximately $73 million de-obligated by FEMA in those DMs in two different venues 

simultaneously. PREPA’s rights would be severely compromised in both venues. Any objection 

to this aspect of the administrative claim should not proceed while any appeal of these DMs is 

pending. 

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26. Cobra’s proposed approach to adjudicate issues piecemeal, during an appeal of the 

DMs, and while the parties and the Court are engaged in attempting to achieve confirmation of 

PREPA’s plan of adjustment would be inefficient, wasteful and unnecessary.

27. PREPA has until January 20, 2023 to file an appeal of the November 21, 2022 DM 

if it determines an appeal is warranted. It has until February 19, 2023 to appeal the December 21, 

2022 DM. If the Court is not inclined to continue the stay through July 31, 2023, the Government 

Parties submit that, at a minimum, the existing stay should be continued to allow PREPA time to 

determine whether appeals are warranted on some or all of the bases for FEMA’s DMs and to 

allow the parties to take those decisions into account in filing a further status report to the Court 

regarding path forward.

28. The updates described in this report warrant a moderate continuation of the stay in 

this matter through July 31, 2023. 

b. Cobra’s Position

29. The stay should be lifted. This Court stayed the litigation of Cobra’s Administrative 

Expense Motion because two specific processes potentially could weigh on PREPA’s liability to 

Cobra under the Contracts: a criminal indictment against Cobra’s former president (but not Cobra) 

and FEMA’s analysis of the Contracts and the performance of hurricane restoration work 

thereunder.13 

30. The Criminal Case is resolved. The statement of facts supporting the plea 

agreement (for a single gratuity charge) of Cobra’s former president had nothing to do with the 

Contracts or the work performed thereunder. Further, contrary to the previous conjectures of the 

 13 The Government Parties’ professed need to focus all their resources on PREPA’s plan of adjustment process was 

never grounds for a stay, in any event, falls far short of the required “hardship” standard. 

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Government Parties, the U.S. Government introduced no additional evidence at the Sentencing 

Hearing. The criminal charges against Cobra’s former president have now been dismissed. The 

Criminal Case cannot serve as the basis for a continued stay.

31. Similarly, FEMA’s analysis is effectively complete and any concern regarding 

duplicative efforts or the need to preserve public resources can be easily avoided. While PREPA 

may determine to pursue appeals of the amounts de-obligated, the outcome of those appeals will 

either uphold FEMA’s original conclusions or result in re-obligations of amounts de-obligated. 

Cobra has maintained consistently that the parties are capable of crafting a sensible and costefficient litigation and discovery plan—if discovery is even necessary at this juncture, given the 

extensive information Cobra has supplied PREPA—that takes account of the current 

circumstances. 

32. Indeed, given the limited nature of the remaining FEMA process, one possibility is 

that the parties agree to a litigation schedule that focuses first on PREPA’s disputes that are 

independent of the issues that may be appealed before FEMA. The Government Parties identified 

certain such issues PREPA disputes above, such as the TGU, the calculation of the interest charges 

and the alleged setoff rights. In addition, the Government Parties have repeatedly raised 

contractual defenses to PREPA’s liabilities based on the Criminal Case. These are not items that 

FEMA will (or can) adjudicate, but rather are the province of this Court. The Government Parties 

do not explain why waiting for the FEMA appeals to reach a final conclusion (which, by reference, 

took approximately 18 months from the issuance of DM for the First Contract to do so) has any 

bearing on these disputes. 

33. Finally, a sensible litigation schedule could also seek to resolve PREPA’s liability 

for costs that FEMA has de-obligated on a final basis. As Cobra has maintained throughout, 

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FEMA’s analysis is not determinative of PREPA’s liability to Cobra and cannot substitute for this 

Court’s independent judgment as to whether such costs were “actual [and] necessary” for PREPA. 

Simply because FEMA has determined not to provide public assistance to PREPA for certain costs 

does not mean that PREPA’s liability to Cobra for those costs is extinguished or that they were not 

reasonable.14 Many of the costs that FEMA has determined not to reimburse PREPA for 

nonetheless clearly provided actual benefits to PREPA or were completed at PREPA’s direction 

and, as FEMA stated in it DM for the Second Contract, the reasonableness of Cobra’s rates has not 

been challenged.15

34. The pattern of three years is unmistakable. The Government Parties have used 

every opportunity at their disposal to delay a resolution of Cobra’s claims, even the consensual 

resolution they invoke. A continued stay will only encourage continued intransigence not 

negotiations and result in the continued accrual of a substantial amount of interest (approximately 

$3.5 million per month) and attorneys’ fees for both the Government Parties and Cobra. The 

substantial prejudice to Cobra, which has not been paid a cent by PREPA since 2019, is stark and 

indisputable. By Cobra’s calculations, over 50% of the amount that is owed to Cobra 

(approximately $124 million) was not de-obligated by FEMA and is not disputed—yet still PREPA 

has not paid Cobra these amounts and FEMA has appeared to say it will not provide any further 

public assistance funding to PREPA until PREPA does so. Lifting the stay and setting a reasonable 

litigation schedule in light of the current circumstances will have the dual benefit of both moving 

 14 To Cobra’s knowledge, the Government Parties have not identified how the $400 million for payment of 

administrative expenses was sized and thus it is difficult to evaluate the Government Parties’ claims that this amount 

is sufficient. In any event, given that PREPA may be liable to Cobra for amounts for which no public assistance is 

granted, it would appear prudent to understand the quantum of such amount prior to pursuing confirmation of its plan 

of adjustment.

15 See DM, 2 of 11 (“For purposes of this Eligibility Determination Memorandum (DM), neither PREPA’s compliance

with federal procurement and contracting requirements nor the reasonableness of the rates Cobra charged to PREPA 

are at issue.”).

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15

these disputes toward conclusion and creating significant incentives for the parties to reach a 

consensual resolution that would not otherwise exist if the stay were to continue. 

35. Accordingly, Cobra requests that the Court order the parties to meet and confer on 

a sensible litigation schedule that takes account of the current circumstances and remaining open 

issues and present such schedule (or competing schedules, if the parties cannot agree) for the 

Court’s approval by no later than the omnibus hearing scheduled for February 2, 2023.

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New York, New York

January 6, 2022

Respectfully submitted,

O’NEILL & BORGES LLC

By: /s/ Hermann D. Bauer

Hermann D. Bauer 

USDC No. 215205

250 Muñoz Rivera Ave., Suite 800 

San Juan, PR 00918-1813

Telephone: (787) 764-8181

Facsimile: (787) 753-8944

Email: hermann.bauer@oneillborges.com 

PROSKAUER ROSE LLP

By: /s/ Paul V. Possinger

Martin J. Bienenstock* 

Paul V. Possinger*

Ehud Barak*

Eleven Times Square New York, NY 10036

Telephone: (212) 969-3000

Facsimile: (212) 969-2900

Email: mbienenstock@proskauer.com 

ppossinger@proskauer.com

ebarak@proskauer.com

* admitted pro hac vice

Attorneys for the Financial Oversight and 

Management Board as representative of the 

Puerto Rico Electric Power Authority

DÍAZ & VÁZQUEZ LAW FIRM, P.S.C.

By: /s/ Katiuska Bolaños 

Katiuska Bolaños

kbolanos@diazvaz.com

USDC-PR 231812

290 Jesús T. Piñero Ave.

Oriental Tower, Suite 803

San Juan, PR 00918

Tel. (787) 395-7133

Fax. (787) 497-9664

REICHARD & ESCALERA, LLC

By: /s/ Rafael Escalera Rodríguez

Rafael Escalera Rodríguez

USDC-PR No. 122609

escalera@reichardescalera.com

By: /s/ Sylvia M. Arizmendi

Sylvia M. Arizmendi

USDC-PR No. 210714

By: /s/ Alana Vizcarrondo-Santana

Alana Vizcarrondo-Santana

USDC-PR No. 301614

vizcarrondo@reichardescalera.com

255 Ponce de León Avenue

MCS Plaza, 10th Floor

San Juan, PR 00917-1913

Telephone: (787) 777-8888

AKIN GUMP STRAUSS HAUER & FELD 

LLP

By: /s/ Scott M. Heimberg

Scott M. Heimberg (pro hac vice)

sheimberg@akingump.com

Allison S. Thornton (pro hac vice)

athornton@akingump.com

2001 K Street, N.W.

Washington, DC 20006

Tel: (202) 887-4000

Fax: (202) 887-4288

and

Ira S. Dizengoff (pro hac vice)

Philip C. Dublin (pro hac vice)

Abid Qureshi (pro hac vice)

idizengoff@akingump.com

pdublin@akingump.com

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Co-Attorneys for Puerto Rico Electric Power 

Authority

MARINI PIETRANTONI MUÑIZ LLC

By: /s/ Luis C. Marini-Biaggi

Luis C. Marini-Biaggi

USDC No. 222301

Email: lmarini@mpmlawpr.com

250 Ponce de León Ave., Suite 900

San Juan, Puerto Rico 00918

Tel: (787) 705-2171

Fax: (787) 936-7494

Attorneys for the Puerto Rico Fiscal

Agency and Financial Advisory Authority

O’MELVENY & MYERS LLP

By: /s/ Maria J. DiConza

John J. Rapisardi* 

Maria J. DiConza*

7 Times Square

New York, NY 10036 

Telephone: (212) 326-2000

Facsimile: (212) 326-2061

Email: jrapisardi@omm.com

mdiconza@omm.com

-andPeter Friedman* 

1625 Eye Street, NW

Washington, D.C. 20006

Tel: (202) 383-5300

Fax: (202) 383-5414

pfriedman@omm.com

-andElizabeth L. McKeen*

610 Newport Center Drive, 17th Floor

Newport Beach, CA 92660

Tel: (949) 823-6900

Fax: (949) 823-6994

emckeen@omm.com

* admitted pro hac vice 

Attorneys for the Puerto Rico Fiscal

aqureshi@akingump.com

Akin Gump Strauss Hauer & Feld LLP

One Bryant Park

New York, New York 10036

Telephone: (212) 872-1000

Facsimile: (212) 872-1002

Attorneys for Cobra Acquisitions LLC

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Agency and Financial Advisory 

Authority and Puerto Rico Electric Power 

Authority

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