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

Case No. 17-3283-LTS

Court Filing Relates Only to 

PREPA

In re:

The Financial Oversight and Management Board for 

Puerto Rico, 

as representative of

The Puerto Rico Electric Power Authority,

Debtor.

PROMESA

Title III

Case No. 17-4780-LTS

(Jointly Administered)

LIMITED OBJECTION OF SYNCORA GUARANTEE INC. TO THE URGENT 

MOTION OF PUERTO RICO ELECTRIC POWER AUTHORITY FOR ORDER (I) 

SCHEDULING A HEARING TO CONSIDER THE ADEQUACY OF INFORMATION 

CONTAINED IN THE DISCLOSURE STATEMENT, (II) ESTABLISHING THE 

DEADLINE FOR FILING OBJECTIONS TO THE DISCLOSURE STATEMENT AND 

REPLIES THERETO, (III) APPROVING FORM AND MANNER OF NOTICE 

THEREOF, (IV) ESTABLISHING DOCUMENT DEPOSITORY PROCEDURES IN 

CONNECTION THEREWITH, AND (V) GRANTING RELATED RELIEF

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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Syncora Guarantee, Inc. (“Syncora”) hereby respectfully submits this Limited Objection

to the Urgent Motion of Puerto Rico Electric Power Authority for Order (I) Scheduling a Hearing 

to Consider the Adequacy of Information Contained in the Disclosure Statement, (II) Establishing 

the Deadline for Filing Objections to the Disclosure Statement and Replies Thereto, (III) 

Approving Form and Manner of Notice Thereof, (IV) Establishing Document Depository 

Procedures in Connection Therewith, and (V) Granting Related Relief [Case No. 17-4780-LTS, 

ECF No. 3112; Case No. 17-3283-LTS, ECF No. 23098] (the “Urgent Motion”).2 

Limited Objection

1. Syncora respects the Court’s inclination to keep the date previously reserved for a 

disclosure statement hearing in late February. Regrettably, the Oversight Board has disrespected 

the whole process outlined by the Court when it envisioned this calendar—a schedule that was 

imposed in light of Syncora and others’ request to impose a deadline for filing a plan. The Court 

could not have been clearer when it set a deadline for a “confirmable plan”:

[W]hat I mean by a confirmable plan is one that meaningfully and realistically 

contemplates scenarios in which each party fails to prevail on their claims in 

litigation to the extent that they expect to in order that, on resolution of issues 

in the litigation, no matter what the outcome is, we can move forward toward 

confirmation with alacrity.

Nov. 2, 2022 Tr. at 16:10-16.

2

 Syncora joins and adopts the arguments raised in the Limited Objection of the Ad Hoc Group of 

PREPA Bondholders to the Motion of Puerto Rico Electric Power Authority for Order (I) Scheduling a 

Hearing to Consider the Adequacy of Information Contained in the Disclosure Statement, (II) Establishing 

the Deadline for Filing Objections to the Disclosure Statement and Replies Thereto, (III) Approving Form 

and Manner of Notice Thereof, (IV) Establishing Document Depository Procedures in Connection 

Therewith, and (V) Granting Related Relief, [Case No. 17-4780-LTS, ECF No. 3127; Case No. 17-

3283-LTS, ECF No. 23133] (the “Ad Hoc Group Limited Objection”). Capitalized terms used but not 

otherwise defined herein shall have the meanings ascribed to such terms in the Ad Hoc Group Limited 

Objection.

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2. As will be shown at the Disclosure Statement hearing in February, the filed Plan 

does not comply with the Court’s directive. With respect to a threshold issue to be litigated, the 

Oversight Board expects the Court to rubber-stamp its view on how much PREPA can pay 

creditors or else it will refuse to go forward with the Plan. The Plan is therefore not confirmable 

“no matter what the outcome” of issues to be litigated. To the contrary, while the Disclosure 

Statement describes a toggle of recoveries based on the outcome of claim and lien objections, the 

Plan collapses upon any successful challenge to the single-most-important issue in this Title III 

case—how much revenue PREPA can fairly and equitably generate (a subject glaringly omitted 

from the Disclosure Statement). The Oversight Board seems to believe it can decide in its sole 

discretion how much is appropriate consideration to offer—regardless of the evidence. If that is 

the standard to be advanced by the Oversight Board at confirmation, it should be clearly disclosed

now so the Court can consider it in February. 

3. While the Court never dictated what the Oversight Board may do in formulating a 

plan for PREPA, the Court did make known what not to do:

“I don't expect to see a place holder filed on December 1. I want to see 

something that the Oversight Board believes in good faith should move toward 

approval of a disclosure statement.”

Nov. 2, 2022 Tr. at 18:3-7.

4. There is no way the Oversight Board believes “in good faith” that the filed Plan is 

confirmable. It filed a mere placeholder, by design and with pre-meditation, after wasting the 

runway granted by the Court to facilitate an earnest mediation effort. Rather than engage in a 

timely, meaningful, and complete exchange of data that could have moved parties towards a 

substantially consensual plan, the Oversight Board obfuscated data on affordable electricity 

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rates—critical data that is necessary for anyone to make informed decisions about PREPA’s 

revenue-generating capacity.3 

5. The Oversight Board’s filed Disclosure Statement does one better—rather than 

obfuscate, it omits all data supporting the supposed new “cap” on recoveries in the Plan (and even 

omits the electricity rates to be charged). Perhaps that is because it would be impossible for 

members of the Oversight Board to attach “good faith” to data that simply does not exist. As will 

be shown at the Disclosure Statement hearing, the asserted “cap” on how much PREPA could 

afford to pay is seriously misleading even when compared with documents posted by the Oversight 

Board contemporaneous with the filing of the Disclosure Statement to cleanse those who 

participated in mediation. Indeed, as is clear from now-public materials, the Oversight Board just 

went billions of dollars backwards in establishing the supposed “cap” in bonds that PREPA could 

afford to issue. In other words, the Plan that was filed is merely a place holder. 

6. Rather than achieve a credible path forward, the Oversight Board used the time 

afforded to develop a “confirmable plan” to buy off small creditor factions (by spending other 

peoples’ money) and also to attempt to splice the single bondholder class into multiple classes 

depending only on whether a creditor votes yes or no (in addition to other impermissible 

distinctions between creditors that are reflected in the existing Plan, as well as yet others that 

Syncora understands are soon to be filed in an amended plan and disclosure statement). Put simply, 

the Disclosure Statement describes a plan that employs—as it must to create the desired 

gerrymander—a classification scheme that is irreconcilable with the Bankruptcy Code and 

controlling First Circuit law. 

3

 The details of this obfuscation—which makes the Disclosure Statement misleading—will be 

explained based on public information in connection with the hearing on the disclosure statement in 

February.

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7. The Court should be aware that the Oversight Board is also doing something else 

truly without precedent: Soliciting bondholders’ votes now—before this Court approves 

anything—and based only on what information the Oversight Board wants recipients to see. To 

the extent the Oversight Board seeks tacit approval of this clearly unlawful solicitation, 

Syncora objects.

8. The Urgent Motion references the establishment of a “Depository” for creditors to 

access in order to “streamline” some aspects of discovery. No process has yet been announced 

about depositions. To the extent that the Oversight Board seeks to limit discovery that is 

otherwise available under the Federal Rules—including when such discovery may be sought 

or the type of discovery—Syncora objects.

4

 

9. In February, Syncora will demonstrate the multiple legal and factual infirmities in 

the Disclosure Statement and the patent un-confirmability of the Plan. For now, while raising 

objection to the Oversight Board’s flouting of this Court’s prior Order, and its pre-mature unlawful 

solicitation of creditors, and reserving its right to propound discovery in the near term pursuant to 

the Federal Rules, Syncora does not object to the scheduling proposed in the Urgent Motion as 

modified by the schedule proposed in the Court’s December 19, 2022 Order [Case No. 17-4780-

4

 For example, discovery will be required to test the credibility of the Oversight Board’s 

assumptions regarding revenues PREPA can reasonably generate. Some members of the Oversight 

Board have been vocal and public as to their alleged rationale for imposing the new “cap” contained in the 

Plan. According to the Oversight Board’s Chairman in an interview given to El Nuevo Dia yesterday, “the 

creditors were asking for more than what we believe the people of Puerto Rico can pay.” Joanisabel 

Gonzalez, David Skeel: “Los bonistas, simplemente, están pidiendo demasiado”, EL NUEVO DÍA

(elnuevodia.com), Dec. 20, 2022. Yet, there is no discussion in the Disclosure Statement of what the 

Oversight Board believes is affordable or why or, more to the point, how the Oversight Board calculated 

that what creditors were asking for was materially different from an affordability perspective than what the 

Oversight Board itself offered. Perhaps that is because, as described by other members of the Oversight 

Board, the data free rationale employed by the Board members for imposing the new “cap” constitutes 

nothing more than “ideology, ... not the law.” Justin Peterson (@JPHusker_), TWITTER Dec. 20, 2022, 

10:07 p.m.), 

https://twitter.com/JPHusker_/status/1605399586004238338?cxt=HHwWhIC85d2aw8csAAAA.

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LTS, ECF No. 3119; Case No. 17-3283, ECF No. 23106]. Syncora takes comfort in the Court’s 

admonition at the November 2, 2022 omnibus hearing that there would be consequences and 

accountability if the Oversight Board filed an unconfirmable plan; namely, that “every possible 

way of reacting to that will be on the table.” Nov. 2, 2022 Tr. at 18:13-14. 

DATED: December 21, 2022

Respectfully submitted,

REICHARD & ESCALERA

By : /s/ Rafael Escalera

Rafael Escalera

USDC No. 122609

escalera@reichardescalera.com

Sylvia M. Arizmendi

USDC-PR 210714

arizmendis@reichardescalera.com

Carlos R. Rivera-Ortiz 

USDC-PR 303409

riverac@reichardescalera.com

255 Ponce de León Avenue

MCS Plaza, 10th Floor

San Juan, Puerto Rico 00917-1913

QUINN EMANUEL URQUHART & 

SULLIVAN, LLP

Susheel Kirpalani (pro hac vice)

susheelkirpalani@quinnemanuel.com

Daniel Salinas

USDC-PR 224006

danielsalinas@quinnemanuel.com

Eric Kay (pro hac vice)

erickay@quinnemanuel.com

51 Madison Avenue, 22nd Floor

New York, New York 10010-1603

Co-Counsel for Syncora Guarantee, Inc.

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03261-00006/13797052.2

CERTIFICATE OF SERVICE

I hereby certify that on this same date, I electronically filed the foregoing with the Clerk 

of the Court using the CM/ECF system which will send notification of such filing to counsel for 

the parties of record.

/s/ Carlos R. Rivera-Ortiz

USDC-PR 303409

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