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 

THE PUERTO RICO ELECTRIC POWER AUTHORITY, 

Debtor. 

PROMESA Title III 

No. 17-BK-4780-LTS

 

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-BK3284-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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ASSURED GUARANTY CORP. AND ASSURED GUARANTY MUNICIPAL CORP.’S 

(A) OBJECTION TO MOTION OF PUERTO RICO ELECTRIC POWER AUTHORITY 

FOR ORDER (I) APPROVING DISCLOSURE STATEMENT, (II) FIXING VOTING 

RECORD DATE, (III) APPROVING CONFIRMATION HEARING NOTICE AND 

CONFIRMATION SCHEDULE, (IV) APPROVING SOLICITATION PACKAGES AND 

DISTRIBUTION PROCEDURES, (V) APPROVING FORMS OF BALLOTS AND 

VOTING PROCEDURES, (VI) APPROVING NOTICE OF NON-VOTING STATUS, 

(VII) FIXING VOTING AND CONFIRMATION DEADLINES, AND (VIII) 

APPROVING VOTE TABULATION PROCEDURES, AND (B) JOINDER TO OMNIBUS 

OBJECTIONS OF THE AD HOC GROUP OF PREPA BONDHOLDERS TO THE 

DISCLOSURE STATEMENT FOR THE TITLE III PLAN OF ADJUSTMENT OF THE 

PUERTO RICO ELECTRIC POWER AUTHORITY [ECF NO. 3111], 

AND RELATED PROCEDURAL MOTIONS RELATED TO THE DISCLOSURE 

STATEMENT AND PLAN CONFIRMATION [ECF NOS. 3113, 3114] 

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TABLE OF CONTENTS 

Page(s) 

PRELIMINARY STATEMENT .....................................................................................................1 

BACKGROUND .............................................................................................................................3 

I. PREPA’s Interest Rate Swaps. ............................................................................................3 

II. The Amended Lien and Recourse Challenge. ......................................................................6 

III. Disclosure Statement. ..........................................................................................................8 

OBJECTION ..................................................................................................................................10 

I. The Disclosure Statement Fails to Include Adequate Information Regarding the 

Swap Claims. .....................................................................................................................10 

A. The Disclosure Statement Fails to Include a Description of the Swap 

Claims. ...................................................................................................................11 

B. The Disclosure Statement Contains Inadequate Disclosures Concerning 

Litigation Claims That Impact Plan Distributions of Swap Claim Holders. .........13 

C. The Disclosure Statement Contains Inadequate Information Regarding the 

Risks and Contingencies for Distributions to the Swap Claim Holders. ...............17 

II. Matured Bonds No Longer Held through DTC Should be Voted by Ballot Rather 

than Through ATOP. .........................................................................................................19 

III. Joinder to Ad Hoc Group Objection ..................................................................................20 

RESERVATION OF RIGHTS ......................................................................................................20 

CONCLUSION ..............................................................................................................................21 

 

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ii 

TABLE OF AUTHORITIES 

Page(s) 

Cases:

BKB Properties LLC v. SunTrust Bank, 

 453 Fed. Appx. 582 (6th Cir. 2011) ...........................................................................................4 

Enron Creditors Recovery Corp. v. Alfa, SAB de CV, 

 651 F.3d 329 (2d Cir. 2011).....................................................................................................18 

In re Brundage-Bone Concrete Pumping, Inc., 

 Case No. 10-10758-TBM, ECF No. 1421 (Bankr. D. Colo. Jan 18, 2011) .............................10 

In re Cardinal Congregate I, 

 121 B.R. 760 (Bankr. S.D. Ohio 1990) ........................................................................11, 12, 17 

In re Energy Future Holdings Corp., 

 Case No. 14-10979-CSS, ECF No. 1957 (Bankr. D. Del. Sept. 3, 2014) ...............................10 

In re Feretti, 

 128 B.R. 16 (Bankr. D.N.H. 1991) ..............................................................................11, 12, 17 

In re Forester, 

 2021 WL 603378 (Bankr. C.D. Cal. Feb. 10, 2021) ..................................................................7 

In re Forrest, 

 424 B.R. 831 (Bankr. N.D. Ill. 2009) .......................................................................................6

 

In re Gatehouse Media, Inc., 

 Case No. 13-12503-MFW, ECF No. 15 (Bankr. D. Del. Sept. 27, 2013) ..............................10 

In re Metrocraft Publ’g Servs., Inc., 

 39 B.R. 567 (Bankr. N.D. Ga. 1984) ................................................................................12, 13 

In re Mickey’s Enters., Inc., 

 165 B.R. 188 (Bankr. W.D. Tex. 1994) .............................................................................13, 17 

In re Nat’l Gas Distribs., LLC, 

 556 F.3d 247 (4th Cir. 2009) ...................................................................................................18 

In re Robert’s Plumbing and Heating LLC, 

 No. 10-23221, 2011 WL 2972092 (Bankr. D. Md. July 20, 2011)..........................................12 

In re Scioto Valley Mortg. Co., 

 88 B.R. 168 (Bankr. S.D. Ohio 1988) ................................................................................11, 12 

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TABLE OF AUTHORITIES, cont’d 

Page(s) 

 iii 

In re Tribune Co. Fraudulent Conveyance Litig., 

 818 F.3d 98 (2d Cir. 2016) ......................................................................................................18 

Thrifty Oil Co. v. Bank of Am. Nat’l Tr., 

 322 F.3d 1039 (9th Cir. 2003) .............................................................................................5, 10 

Westland Oil Dev. Corp. v. MCorp Mgmt. Solutions, 

 157 B.R. 100 (S.D. Tex. 1993) ..........................................................................................13, 17

Whyte v. Barclays Bank PLC, 

 494 B.R. 196 (S.D.N.Y. 2013), aff’d 664 Fed. Appx. 60 (2d Cir. 2016) ..................................6 

Statutes: 

11 U.S.C. § 

 362(b)(17) ..............................................................................................................................5, 9 

 546(g) ...................................................................................................................................5, 18 

 560..............................................................................................................................................5 

 1125(a)(1) ................................................................................................................................11 

 1125(b) .....................................................................................................................................10 

Fed. R. Bankr. P. 3007(b) ................................................................................................................6 

Fed. R. Bankr. P. 7001 .....................................................................................................................6

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Assured Guaranty Corp. and Assured Guaranty Municipal Corp. (together, “Assured”) 

hereby submit this (A) objection to the Motion of Puerto Rico Electric Power Authority for Order 

(I) Approving Disclosure Statement, (II) Fixing Voting Record Date, (III) Approving Confirmation 

Hearing Notice and Confirmation Schedule, (IV) Approving Solicitation Packages and 

Distribution Procedures, (V) Approving Forms of Ballots and Voting Procedures (VI) Approving 

Notice of Non-Voting Status, (VII) Fixing Voting and Confirmation Deadlines, and (VIII) 

Approving Vote Tabulation Procedures (Case No. 17-3283-LTS, ECF No. 23099, the “Motion”),2

and (B) partial joinder (such joinder and objection, together, the “Objection”) to the Omnibus 

Objections of the Ad Hoc Group of PREPA Bondholders to the Disclosure Statement for the Title 

III Plan of Adjustment of the Puerto Rico Electric Power Authority [ECF No. 3111], and Related 

Procedural Motions Related to the Disclosure Statement and Plan Confirmation (the “Ad Hoc 

Group Objection”), and respectfully state as follows: 

PRELIMINARY STATEMENT 

1. At the November 2, 2022 omnibus hearing, this Court made clear that it expected 

the Financial Oversight and Management Board for Puerto Rico (“FOMB”) to submit a 

“confirmable” plan, meaning a plan 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 

toward confirmation with alacrity.” See Hr’g Tr. 16:10-16, Nov. 2, 2022, Case No. 17-3283, ECF 

No. 22795. Despite the court’s clear expectations, the plan and disclosure statement filed by the 

Board are patently unconfirmable and unapprovable. FOMB filed the Disclosure Statement for 

 

2

 Capitalized terms used in this Objection but not defined herein shall have the meanings ascribed to 

them in the Motion and/or in the Title III Plan, as applicable. Unless otherwise indicated, references to 

ECF numbers in this Objection are to the docket in case number 17-4780-LTS. 

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Title III Plan of Adjustment of the Puerto Rico Electric Power Authority (Case No. 17-3283, ECF 

No. 23097, the “Disclosure Statement”) and a related Title III plan of adjustment for PREPA (the 

“Title III Plan”). While FOMB touted that it had the support of two creditor groups that 

collectively hold $800 million of claims, this represents less than ten percent of the indebtedness 

that FOMB claimed PREPA needed to restructure.3

 In other words, the Title III Plan lacks the 

support of the vast majority of PREPA’s creditors. 

2. Beyond lacking significant creditor support, the Disclosure Statement is clearly but 

a placeholder, because it is devoid of basic information that creditors need to properly assess the 

Title III Plan. As this Court has recognized, a disclosure statement must provide “information 

sufficient to permit a hypothetical creditor or investor to make an informed judgment about the 

proposed Plan of Adjustment.”4

 The Disclosure Statement lacks such information. 

3. As one example, Assured is an insurer of swap claims, which are included within 

Class 7 of the Title III Plan. The Disclosure Statement purports to describe the treatment of such 

claims, but actually fails to include any summary of the swap claims. The Disclosure Statement 

also does not explain what claims Assured, in its capacity as the holder of the swap claims, would 

settle or why litigation concerning the PREPA bondholders’ liens and recourse is relevant to the 

treatment of Class 7. Nor does the Disclosure Statement describe a potential claim objection to 

the Swaps under section 502(b)(2) of the Bankruptcy Code—notwithstanding that FOMB has 

admitted it may bring such an objection. That information is critical because, by FOMB’s own 

admission, the recoveries under the Plan are driven by whether: (i) the swap holders settle litigation 

claims and (ii) FOMB prevails in its lien and recourse adversary proceeding against the 

 

3 See ECF No. 2 ¶ 4 (“PREPA believes that, as of the Petition Date, it has over $10 billion in liabilities 

that it must restructure so that it can operate as a viable business entity.”). 

4

 Hr’g Tr. 75:1-3, July 14, 2021, Case No. 17-3283, ECF No. 17379. 

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bondholders. But that lien and recourse adversary complaint was not filed against the swap 

holders. Any disclosure statement must clearly describe the treatment creditors will receive, when 

creditors will receive their distributions, and the risks in obtaining distributions. The Disclosure 

Statement fails to provide Assured, in its capacity as the holder of the swap claims, with this basic 

information. 

4. In addition, the proposed voting procedures for which the Motion seeks approval 

are flawed, because those voting procedures generally require uninsured claims in the “Bond 

Classes” to vote through DTC’s ATOP system, but fail to account for the fact that certain bonds 

in the “Bond Classes” were paid by Assured at maturity and therefore are no longer held through 

DTC. PREPA’s proposal that claimants in the “Bond Classes” vote through DTC therefore does 

not work for claimants holding these matured bonds, and such claimants should instead be 

permitted to vote by ballot. 

5. As explained in further detail below, the Disclosure Statement cannot be approved 

unless it is revised to include adequate information, and the proposed Disclosure Statement Order 

must be revised to provide appropriate voting procedures for holders of matured bonds. In the 

absence of such necessary revisions (and proper notice to creditors), the Motion should be denied. 

6. In addition, the Title III Plan and Disclosure Statement are rife with numerous other 

infirmities, particularly relating to PREPA’s Revenue Bonds. To the extent provided below, 

Assured joins in the Ad Hoc Group Objection, which addresses these additional infirmities. 

BACKGROUND 

I. PREPA’s Interest Rate Swaps. 

7. On July 3, 2017 (the “Petition Date”), FOMB filed a Title III petition on behalf of 

PREPA. On the Petition Date, FOMB filed the Statement of Oversight Board Regarding PREPA’s 

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Title III Case (the “First Day Declaration”). ECF No. 2.5

 In the First Day Declaration, the Board 

provided a high level summary of PREPA’s capital structure, which consists of approximately $10 

billion of financial indebtedness. Most of that debt consists of PREPA’s revenue bonds and 

unsecured lines of credit, but it also includes interest rate swaps (the “Swaps”). Id. ¶ 6. 

8. Prior to the Petition Date, PREPA entered into agreements with two third party 

dealers with respect to the Swaps: JPMorgan Chase Bank N.A. and UBS AG (collectively, the 

“Swap Counterparties”). Assured has insured certain payments under the Swaps. PREPA used 

the Swaps as a “cash flow hedge” on certain variable rate bonds to “take advantage of favorable 

market interest rates and to limit interest rate risk associated with variable rate debt exposure.”6

 In 

other words, the Swaps serve the purpose of “enabling [PREPA] to obtain the benefit of the 

equivalent of fixed-rate financing when it was unable to syndicate a sizable fixed-rate loan.”7 The 

Swaps are governed by Master ISDA Agreements and related confirmations and schedules (the 

“Swap Agreements”), which create obligations that are independent of PREPA’s revenue bonds. 

9. Like any other swap agreement, the Swap Agreements require PREPA and the 

Swap Counterparties to exchange payments based upon a fixed benchmark. In standard swap 

documentation, that benchmark is known as the “notional amount,” which is a hypothetical loan 

that is never exchanged between the parties.8 One party agrees to make payments in an amount 

“equal to the interest which would accrue on an agreed hypothetical principal amount . . . at a fixed 

 

5

 The accompanying notice for the First Day Declaration (which is also filed in ECF No. 2) does not list 

the First Day Declaration as an exhibit. For the avoidance of doubt, all references to paragraphs within the 

First Day Declaration shall only refer to the Statement of the Oversight Board Regarding PREPA’s Title III 

Case, not to the accompanying notice. 

6 See 2020 Audited Financial Statements at 41, 62, available at https://emma.msrb.org/P21672654.pdf. 

7 BKB Properties LLC v. SunTrust Bank, 453 Fed. Appx. 582, 587 n.2 (6th Cir. 2011). 

8 See id. at 583-84 (“Although this notional amount is used to calculate the payments owed, it is not 

directly exchanged.”). 

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interest rate,” while the other party agrees to make the same payments but measured by a “floating 

interest rate.”9 If one party’s interest rate exceeds the other party’s rate, then the first party is 

considered to be “out of the money” and has to make net payments to the other party. There is 

thus the prospect that the debtor may receive net periodic payments under a swap agreement if it 

is “in the money.” 

10. In addition, interest rate swaps—including the Swaps at issue here—permit the 

swap counterparty to terminate the swap prior to its scheduled termination date under certain 

circumstances. Such early termination may occur due to a debtor’s bankruptcy filing. When the 

swap is terminated, the swap counterparty obtains “market quotations for the cost of replacing the 

swap at the time of termination.”10 Those market quotations, in turn, form the basis for calculating 

the “termination damages” for the swap.11 Swap agreements may also provide that a defaulting 

party may not collect termination damages.12 These provisions, among others, are specifically 

protected by the safe harbor provisions of the Bankruptcy Code and thus no provision of the 

Bankruptcy Code (nor any court order) may interfere with a swap counterparty’s rights under the 

swap agreements.13 Those safe harbor provisions have been interpreted broadly by courts. As one 

court observed, “the facial breadth and the corresponding legislative history make plain that 

 

9 Thrifty Oil Co. v. Bank of Am. Nat’l Tr., 322 F.3d 1039, 1042 (9th Cir. 2003). 

10 Id. at 1043. 

11 See id.

12 See id. 

13 See, e.g., 11 U.S.C §§ 362(b)(17) (removing application of stay from swaps), 546(g) (exempting swaps 

from avoidance claims), 560 (broadly protecting the rights to terminate, liquidate, or accelerate a swap, as 

well as providing that the ability to net out termination values or payments “shall not be stayed, avoided, 

or otherwise limited by operation of any provision of this title or by order of a court or administrative 

agency in any proceeding under this title”). 

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Congress intended to place swap transactions totally beyond the inherently destabilizing effects of 

bankruptcy and its attendant litigation.”14

11. The Swaps have been included in virtually every restructuring support agreement 

entered into by PREPA, including the 2019 restructuring support agreement that FOMB negotiated 

(the “RSA”). For example, in the RSA, the Swaps were to receive the same treatment as PREPA’s 

revenue bonds and would be exchanged for securitization bonds at the same exchange ratio as 

PREPA’s revenue bonds. See ECF No. 1235-1, Ex. C (RSA Recovery Plan Term Sheet) at n.3 

(providing that the exchange ratio for swap payments—including termination damages—would 

be the same as the bonds). Further, the parties would agree to the amount of the termination 

damages. See id.15 

II. The Amended Lien and Recourse Challenge. 

12. On July 1, 2019, FOMB filed an adversary complaint against PREPA’s bond trustee 

seeking to determine the extent of and to avoid the bond trustee’s security interests, which is relief 

that must be sought in an adversary complaint (the “Lien and Recourse Challenge”). Adv. Proc. 

No. 19-391, ECF No. 1.16 The Swaps were not included in that complaint. See Adv. Proc. No. 

 

14 Whyte v. Barclays Bank PLC, 494 B.R. 196, 200 (S.D.N.Y. 2013) (emphasis added), aff’d 664 Fed. 

Appx. 60 (2d Cir. 2016). 

15 The treatment of the Swaps was included as part of the “Assured Treatment,” which, in turn, was 

included within the “Stipulated Treatment.” See, e.g., RSA §§ 2(c) (defining Stipulated Treatment to 

include Assured Treatment and providing for deemed allowed secured claim as part of Stipulated Treatment 

equal to the anticipated exchange ratio), 1(a) (defining “Assured Treatment” to include treatment set forth 

in the Recovery Plan Term Sheet regarding “Assured Insured Interest Rate Swaps”); id. Ex. C. (Recovery 

Plan Term Sheet), n.3 (stating that the “Exchange Ratio” for the applicable bond claims would also apply 

to the Assured Insured Interest Rate Swaps, including, without limitation, the termination damages for those 

Swaps). FOMB agreed not to take any action that would interfere with its ability to provide that Stipulated 

Treatment, and, in exchange, Assured (as a “Supporting Holder”) agreed to refrain from exercising any 

remedies against the Government Parties. See id. §§ 2, 3, 6, 7, 10(b). The RSA remained in effect through 

at least early 2022. 

16 See Fed. R. Bankr. P. 3007(b), 7001; see also In re Forrest, 424 B.R. 831, 833 (Bankr. N.D. Ill. 2009) 

(“[W]hen the existence of the lien is itself at issue, then the ‘validity’ and ‘extent’ of the lien are certainly 

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19-391, ECF No. 1. Thereafter, FOMB moved to stay the Lien and Recourse Challenge, as 

required under the RSA. See Adv. Proc. No. 19-391, ECF No. 2. Following a three year stay of 

the Lien and Recourse Challenge, FOMB moved to establish a litigation schedule for the Lien and 

Recourse Challenge, citing the need to address what it called “gating issues.” Adv. Proc. No. 19-

391 ECF No. 11 ¶¶ 6-7. These gating issues were limited exclusively to PREPA’s bonds. See id.

¶¶ 6-7, 34-41. This Court established a briefing schedule for the Lien and Recourse Challenge, 

which permitted FOMB to file an amended complaint. 

13. Pursuant to this Court’s order, FOMB filed an amended complaint in the Lien and 

Recourse Challenge in September 2022. See Adv. Proc. No. 19-391, ECF No. 26. The amended 

complaint included new causes of action that sought to limit the allowed amount of the 

bondholders’ claims to monies credited on the petition date to a trustee held special fund known 

as the “Sinking Fund.” See id. As in the original complaint, FOMB did not include any allegations 

about the Swaps, did not seek any relief with respect to the Swaps, and did not name the Swap 

Counterparties or Assured in its capacity as an insurer of the Swaps as defendants. See generally 

id. Competing summary judgment motions were filed by the parties in the Lien and Recourse 

Challenge, and briefing on various pleadings concluded in January 2023. A hearing on those 

motions was held on February 1, 2023. 

14. As FOMB has repeatedly acknowledged, the statute of limitations for any 

additional avoidance claims expired on July 1, 2019—nearly four years ago. See Disclosure 

Statement at p. 251 (acknowledging that actions brought pursuant to section 546(a)—which 

includes actions under section 544—needed to be filed by July 1, 2019); see also Joint Motion of 

Oversight Board and AAFAF to Stay Adversary Proceeding, Adv. Proc. No. 19-391, ECF No 2 

 

at issue, so an adversary proceeding is necessary.”); In re Forester, 2021 WL 603378, at **1-2 (Bankr. 

C.D. Cal. Feb. 10, 2021) (collecting cases standing for similar proposition). 

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¶ 3 (“Pursuant to Bankruptcy Code section 546(a), the two-year statute of limitations for the 

Debtor to bring avoidance actions under Bankruptcy Code section 544 (among others) is set to 

expire on July 1, 2019.”). More importantly, the Board has never contended that any claims arising 

under the Swaps (whether unsecured or otherwise) should generally be disallowed under section 

502(b) of the Bankruptcy Code. 

III. Disclosure Statement. 

15. On December 16, 2022, FOMB filed the Disclosure Statement. As is customary, 

the Disclosure Statement summarizes the treatment provided to PREPA’s creditors under the Title 

III Plan. With respect to the Swaps, the Disclosure Statement indicates that Assured, in its capacity 

as the holder of the Class 7 Assured Insured Interest Rate Swaps Claims, shall receive the same 

treatment as settling or non-settling bondholders, as applicable. See Disclosure Statement at 28, 

42 n.43. That treatment is generally consistent with the prior RSAs, which treated the Swaps 

equally with the Bonds. See supra ¶ 11. 

16. The Swap claims are included in Class 7 under the Title III Plan, with such claims 

being labeled under the Title III Plan as the “Assured Insured Interest Rate Swaps Claims.” 

Despite acknowledging the treatment of the Swaps and providing a separate class for such claims, 

the Disclosure Statement does not contain any description or summary of the Swap claims. See 

Disclosure Statement at pp. 58-77 (not including any description or summary of Swap claims in 

summary of capital structure). 

17. And while the Title III Plan provides the Swaps with equal treatment with the 

Bonds (which is consistent with all other RSAs), the Disclosure Statement notes that recoveries of 

the Swaps and bond claims are driven entirely by litigation outcomes in the Lien and Recourse 

Challenge. See id. at pp. 258-59; see also id. at 38 (noting that the “quantity of recovery on the 

remaining portions of [the Settling Monolines’] Allowed Claims depends on the result of the 

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Amended Lien & Recourse Challenge”). But the Disclosure Statement does not explain why the 

litigation outcomes in the Lien and Recourse Challenge are relevant to the Swap claims and how 

specifically such litigation outcomes would impact the Swap claims. 

18. The Disclosure Statement also states that the holders of “Assured Insured Interest 

Rate Swaps Claims” shall be entitled to elect “to settle their claims against PREPA related to the 

Amended Lien & Recourse Challenge.” Id. at p. 258.17 However, the Lien and Recourse 

Challenge does not address the Swaps. See generally Adv. Proc. No. 19-391, ECF No. 26. The 

Disclosure Statement also notes that holders of Swap claims would settle their pending lift stay 

motions. Disclosure Statement at p. 258. But Assured, in its capacity as the holder of the Swap 

claims, did not file any lift stay motions, and neither Assured nor the Swap Counterparties would 

need to file any such motions because remedial actions by swap and other financial participants 

are not subject to the automatic stay. See 11 U.S.C. § 362(b)(17). Thus, the Disclosure Statement 

provides insufficient and inaccurate information related to what specific claims will be settled by 

Assured in its capacity as the holder of the “Assured Insured Interest Rate Swaps Claims.” 

19. Finally, the Disclosure Statement provides that the allowed amount of the Swap 

claims will be subject to agreement between FOMB and the Settling Monoline. See Disclosure 

Statement at p. 261. In the absence of an agreement between the parties as to the allowed amount 

of such claim, then the Disclosure Statement provides that the parties may submit such dispute to 

the Court or, to a “Person” or “Entity” (as such terms are defined in the Bankruptcy Code). Id. 

This type of mutual agreement language typically refers to an agreement between the parties as to 

 

17 The Disclosure Statement refers the reader to “Sections V.I(1) and (7) . . . for a summary of” the 

disputes referenced on page 258 of the Disclosure Statement. Id. That cross-reference appears to be a 

scrivener’s error because neither of the cross-referenced sections contains a relevant summary of such 

disputes. See generally Disclosure Statement, Section V.I (discussing FOMB’s investigation of “potential 

causes of action”). 

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the termination damages for an interest rate swap, which typically is not liquidated prior to the 

bankruptcy.18 Indeed, that is precisely what FOMB and Assured previously agreed to under the 

RSA. See RSA Recovery Plan Term Sheet n.3 (ECF No. 1235-1) (“Such Swap MTM Amounts 

will be mutually agreed to between the Government Parties and Assured. . . .”). The Disclosure 

Statement does not explain whether FOMB will object to the general allowance of the Swap 

claims.19 More importantly, the Disclosure Statement provides no information regarding the 

estimated timeframe for adjudication of any such claim objection (including appeals) and whether 

such adjudication will occur prior to receipt of distributions under the plan of adjustment. 

OBJECTION 

I. The Disclosure Statement Fails to Include Adequate Information Regarding the Swap 

Claims. 

20. Section 1125 of the Bankruptcy Code provides that solicitation of votes on a plan 

may not occur unless and until a court determines that a disclosure statement contains “adequate 

information.” 11 U.S.C. § 1125(b). As defined in the Bankruptcy Code, “adequate information” 

is information that “would enable . . . a hypothetical investor of the relevant class to make an 

 

18 See, e.g., In re Energy Future Holdings Corp., Case No. 14-10979-CSS, ECF No. 1957 (Bankr. D. Del. 

Sept. 3, 2014) (providing for mutually agreeable liquidation procedures for calculating settlement payments 

for swaps during bankruptcy and negotiation of amount of termination damages); In re Gatehouse Media, 

Inc., Case No. 13-12503-MFW, ECF No. 15 at pp. 24-25 (Bankr. D. Del. Sept. 27, 2013) (noting that swap 

claims were not yet liquidated, and that the debtors reserved their rights with respect to determination of 

such amount); In re Brundage-Bone Concrete Pumping, Inc., Case No. 10-10758-TBM, ECF No. 1421 at 

14, 47 (Bankr. D. Colo. Jan. 18, 2011) (noting that swap termination fees may include amounts stipulated 

between the parties or “such other amounts as may be Allowed by the Bankruptcy Court”). 

19 Just recently, FOMB indicated to Assured that it may seek to object to the Swap claims on the grounds 

that payments on such Swaps are payments on post-petition interest. To Assured’s knowledge, FOMB has 

not notified the Swap Counterparties of this potential claim objection. Any such claim objection would be 

without merit, as precedent is clear that swap payments and swap termination damages are not the economic 

equivalent of interest (unmatured or otherwise) and thus not subject to disallowance under section 

502(b)(2). See, e.g., Thrifty Oil Co. v. Bank of America Nat. Trust, 322 F.3d 1039 (9th Cir. 2003). FOMB 

has not disclosed whether it will actually waste PREPA’s resources to pursue that claim objection, and if 

so, when it will do so. That disclosure is critical to Assured and other holders of Swap claims, as well as 

to PREPA’s other creditors. 

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informed judgment about the plan. . . .” Id. § 1125(a)(1). In assessing whether a disclosure 

statement provides adequate information, the court may consider “the complexity of the case, the 

benefit of additional information to creditors and other parties in interest, and the cost of providing 

additional information.” Id. 

21. Courts have found that disclosure statements should include information regarding, 

inter alia, “the circumstances that gave rise to the filing of the bankruptcy petition,” the “claims 

against the estate, including those allowed, disputed, and estimated,” the treatment that creditors 

will receive under the plan, and “risks being taken by the creditors and interest holders.” In re 

Feretti, 128 B.R. 16, 18-19 (Bankr. D.N.H. 1991). Moreover, a case may “arise in which 

disclosure of all the foregoing type of information is still not sufficient to provide adequate 

information upon which holders of claims or interests may evaluate a plan.” In re Scioto Valley 

Mortg. Co., 88 B.R. 168, 171 (Bankr. S.D. Ohio 1988). At a minimum, a disclosure statement 

“must clearly and succinctly inform the average unsecured creditor what it is going to get, when it 

is going to get it, and what contingencies there are to getting its distribution.” In re Feretti, 128 

B.R. at 19; see also In re Cardinal Congregate I, 121 B.R. 760, 765 (Bankr. S.D. Ohio 1990) (“A 

disclosure statement should contain all material information relating to the risks posed to creditors 

and equity interest holders under the proposed plan of reorganization.”). 

22. For the reasons discussed below, the Disclosure Statement fails to provide adequate 

information with respect to the Swap claims. The Disclosure Statement must therefore be revised 

to provide such information, and creditors must receive adequate notice of such revisions. In the 

absence of such necessary revisions, the Motion should be denied. 

A. The Disclosure Statement Fails to Include a Description of the Swap Claims. 

23. One of the basic pieces of information required in a disclosure statement is a 

description of the “claims against the estate, including those allowed, disputed, and estimated.” In 

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re Feretti, 128 B.R. at 18. When a disclosure statement fails to include a complete description of 

those claims, courts have denied approval of the disclosure statement. See, e.g., In re Scioto Valley 

Mortg. Co., 88 B.R. at 171 (denying approval of disclosure statement and ordering debtor to 

include disclosure of “Agreement and Note” entered into between debtor and a creditor); In re 

Cardinal Congregate I, 121 B.R. 760 at 767 (disclosure statement failed to adequately describe 

certain loan claims); In re Metrocraft Publ’g Servs., Inc., 39 B.R. 567, 569-70 (Bankr. N.D. Ga. 

1984) (denying approval of disclosure statement that contained inadequate disclosure of scheduled 

claims); In re Robert’s Plumbing and Heating LLC, No. 10-23221, 2011 WL 2972092 at **7-8 

(Bankr. D. Md. July 20, 2011) (denying disclosure statement and ordering debtor to include a 

description of the nature of its prepetition claims in a future disclosure statement). This makes 

inherent sense, as creditors reviewing a plan need to understand what claims are included in each 

class, as well as the nature and magnitude of such claims in order to make an informed judgment 

about a plan. 

24. The Disclosure Statement fails to include any description of the Swap claims. 

PREPA’s creditors need such a description in order to properly assess what claims are receiving 

distributions, as well as the nature and size of the claims in a particular class. Including a brief 

description of the Swap claims is hardly cumbersome or costly here. FOMB included that 

summary in COFINA’s disclosure statement.20 Moreover, the First Day Declaration prepared by 

FOMB summarized the Swap claims and thus FOMB can easily import that description into the 

Disclosure Statement. FOMB cannot, however, expect PREPA’s creditors to scour through the 

docket to obtain such information. That basic information must be included in the Disclosure 

Statement itself so that the Disclosure Statement can serve its intended purpose – permitting all 

 

20 See Case No. 17-03283-LTS, ECF No. 4364 at 38. 

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creditors to make an informed judgment about and assess the Title III Plan. To help the Disclosure 

Statement carry out that goal, Assured has included proposed language summarizing the Swaps in 

Exhibit A. 21 

B. The Disclosure Statement Contains Inadequate Disclosures Concerning Litigation 

Claims That Impact Plan Distributions of Swap Claim Holders. 

25. A “disclosure statement, to be adequate, should disclose all litigation likely to arise 

in a non-bankruptcy context,” and“[b]ankruptcy related litigation which is likely to arise should 

also be specifically disclosed.” In re Mickey’s Enters., Inc., 165 B.R. 188, 194 (Bankr. W.D. Tex. 

1994). Moreover, “any bankruptcy litigation that the plan proponent is planning on bringing 

against a known creditor with known claims . . . should be fully disclosed.” Id. (emphasis added); 

see also Westland Oil Dev. Corp. v. MCorp Mgmt. Solutions, 157 B.R. 100, 103-04 (S.D. Tex. 

1993) (holding that a debtor “must disclose those claims that are likely”). Thus, a disclosure 

statement does not contain adequate information when it fails to disclose litigation that the debtor 

knows it may bring. See, e.g., Mickey’s Enters. Inc., 165 B.R. at 194 (where debtor failed to 

disclose potential preference claims, disclosure statement provided inadequate information for 

purposes of Bankruptcy Code section 1125); In re Metrocraft Publ’g Servs. Inc., 39 B.R. 567, 570-

71 (Bankr. N.D. Ga. 1984) (disclosure statement denied where debtor failed to “shed light” on its 

 

21 The language in Exhibit A generally incorporates the language from paragraph 6 of the First Day 

Declaration, which summarized the Swap claims. In the First Day Declaration, the Board estimated that 

PREPA was approximately $52.2 million “out of the money” as of June 30, 2015. ECF No. 2 ¶ 6. However, 

in its recently filed best interest analysis, the Board estimated that PREPA is approximately $7 million “out 

of the money” on the Swaps. See Case No. 17-3283-LTS, ECF No. 23412-2 at p. 6. It is not clear whether 

that figure includes the net payments made prior to any early termination of the Swaps. Those payments 

would clearly be a part of the Swap holders’ claims. Given that the “out-of-the money” figures fluctuate 

and remain subject to change, Assured proposes to omit that figure in the Disclosure Statement. As noted 

above, termination damages are calculated under the Swap Agreements by obtaining quotes from market 

participants. Thus, to provide a more accurate disclosure to parties in interest in this case, Assured proposes 

that the Disclosure Statement should provide that the size of the swap payments is not presently 

ascertainable. 

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preferential transfer claims that debtor knew existed, as well as certain other litigation with an 

affiliate). 

26. FOMB admits that litigation recoveries in the Lien and Recourse Challenge will 

drive the recoveries of the holders of Assured Insured Interest Rate Swaps Claims, and indeed, a 

higher recovery is provided to such holders where they agree to settle certain claims. See 

Disclosure Statement at pp. 258-59 (stating that the plan would settle the lift stay motion seeking 

to appoint a receiver, and claims “related to the Amended Lien & Recourse Challenge”); see also 

id. at 38 (noting that the “quantity of recovery on the remaining portions of [the Settling 

Monolines’] Allowed Claims depends on the result of the Amended Lien & Recourse Challenge”); 

id. at 28 (showing various recoveries for Settling and Non-Settling Bondholders).22 The Lien and 

Recourse Challenge thus serves as the guidepost for creditors’ recoveries, including those of 

Assured in its capacity as the holder of the Assured Insured Interest Rate Swaps Claims. 

27. But the Disclosure Statement does not explain why the Lien and Recourse 

Challenge is relevant to the Swap recoveries.23 The Lien and Recourse Challenge does not concern 

or otherwise address the Swaps, only PREPA’s revenue bonds. See supra ¶¶ 12-14; see also Adv. 

Proc. No. 19-391, ECF No. 26 ¶¶ 74-114 (seeking declarations only with respect to the “Master 

PREPA Bond Claim” and against “the Trustee”). The Lien and Recourse Challenge complaint 

does not contain a single factual allegation concerning the Swaps, and does not name the Swap 

 

22 As defined in the Plan, the term “Settling Monoline” is applicable to both PREPA bond claims and the 

“Assured Insured Interest Rate Swaps Claims.” Title III Plan at p. 21 (definition of “Settling Monoline”). 

23 Although confirmation of the Title III Plan is not presently before the Court, the Title III Plan contains 

similar infirmities. For example, the Plan states that any “Deficiency Claim” for the Swap claims shall be 

“determined by the Amended Lien & Recourse Challenge Final Resolution.” Title III Plan at p. 8 

(definition of “Deficiency Claim”). The “Amended Lien & Recourse Challenge” is Adv. Proc. No. 19-391. 

Id. at 3 (definition of “Amended Lien & Recourse Challenge”). The Swaps and Swap Counterparties are 

not addressed in the Lien and Recourse Challenge complaint, and thus it is not clear why the “Amended 

Lien & Recourse Challenge Final Resolution” is relevant to the Swap claims. 

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Counterparties or Assured in its capacity as an insurer of the Swaps as defendants.24 The 

Disclosure Statement needs to provide more information that would explain why the Lien and 

Recourse Challenge drives the Swap claim holders’ recoveries, including if such creditors do not 

settle their claims.25 FOMB disclosed in its best interest analysis that the “swap agreements have 

the same priority as the bond claims.” See Case No. 17-3283-LTS, ECF No. 23412-2 at 6. If that 

is the asserted basis for equal application of the Lien and Recourse Challenge to the Swaps, then 

the Disclosure Statement should include that disclosure. 

28. Nor does the Disclosure Statement properly disclose which claims the Swap holders 

would settle, including specifically what claims FOMB believes the Swap holders would have the 

authority to settle. Instead, the Disclosure Statement provides that a Settling Monoline (which 

includes Assured on account of its Swap claims) would release any claims related to the lift stay 

motion and the Lien and Recourse Challenge. See Disclosure Statement at pp. 42-43. As 

previously discussed, however, the Swap claims are not subject to the Lien and Recourse 

Challenge, and Assured, in its capacity as the holder of Swap claims, cannot settle the claims 

asserted therein. The Swap claims were likewise not subject to any of the lift stay motions that 

were filed. Only the bondholders filed such motions. See, e.g., ECF No. 975 at 1 (insurers filing 

lift stay motion in capacity as bondholders); ECF No. 2973 at 1 (movants filed motion to dismiss 

 

24 Moreover, the deadline to file any avoidance action was on July 1, 2019, which was nearly four years 

ago. See Disclosure Statement at p. 251 (acknowledging that actions brought pursuant to Bankruptcy Code 

section 546(a)—which includes actions under Bankruptcy Code section 544—needed to be filed by July 1, 

2019); see also Joint Motion of Oversight Board and AAFAF to Stay Adversary Proceeding, Adv. Proc. 

No. 19-391, ECF No 2 ¶ 3 (“Pursuant to Bankruptcy Code section 546(a), the two-year statute of limitations 

for the Debtor to bring avoidance actions under Bankruptcy Code section 544 (among others) is set to expire 

on July 1, 2019.”). The Swap Counterparties—as the direct parties to the Swap Agreements—would be 

necessary parties to any lien challenge. 

25 This Court has previously recognized in the context of Rule 2019 disclosures that when a plan is driven 

by claim objection litigation, enhanced disclosures are necessary. See Case No. 17-3283-LTS, ECF No. 

13217 at 12. 

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and lift stay motion in capacity as bondholders). The Disclosure Statement should clarify what 

claims, if any, the holders of Swap claims would be settling. If those claims are in addition to the 

pending lift stay motions and Lien and Recourse Challenge concerning the bondholders, then the 

Disclosure Statement should be amended to provide that clarification. Assured has included in 

Exhibit A proposed language regarding the claims that Assured, in its capacity as the holder of the 

Assured Insured Interest Rate Swaps Claims, would have authority to settle. 

29. While the Disclosure Statement vaguely references a potential dispute as to the 

allowed amount of the Swap claims, this language appears to reflect customary language regarding 

the size and calculation of any termination damages, and does not appear to relate to the general 

allowance of the claim itself. See supra ¶ 19. This is confirmed by language in the Disclosure 

Statement that discloses that such dispute can either be submitted to the Court or, upon mutual 

agreement between FOMB and Assured, to a “person” or “entity” as such terms are defined in the 

Bankruptcy Code. See Disclosure Statement at 261. Debtors frequently attempt to preserve the 

flexibility to adjust the allowed amount of the termination damages claim arising from a swap 

agreement based upon a mutual agreement between the parties as to the size of that claim and the 

calculation of such damages, particularly given the potential for fluctuation in the market.26 

30. To the extent that FOMB is not merely referencing a dispute concerning the 

calculation of the Swaps’ termination damages and is instead referencing an objection to the 

general allowance of the Swap claims in their entirety, then the Disclosure Statement should so 

clarify. If FOMB intends to object to Swap claims under section 502(b)(2) of the Bankruptcy 

Code, then that should be disclosed within the Disclosure Statement. As previously noted, FOMB 

has already informed Assured of the possibility of raising such an objection. Regardless, “any 

 

26 See generally supra note 18. 

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bankruptcy litigation that the plan proponent is planning on bringing against a known creditor with 

known claims . . . should be fully disclosed.” In re Mickey’s Enters., Inc., 165 B.R. 188, 194 

(Bankr. W.D. Tex. 1994); Westland Oil Dev. Corp., 157 B.R. at 103-04 (holding that a debtor 

“must disclose those claims that are likely”). Any potential litigation should therefore be disclosed 

in the Disclosure Statement.27 

C. The Disclosure Statement Contains Inadequate Information Regarding the Risks and 

Contingencies for Distributions to the Swap Claim Holders. 

31. A disclosure statement must provide a creditor with information concerning “what 

contingencies there are to getting its distribution.” In re Feretti, 128 B.R. at 19; see also In re 

Cardinal Congregate I, 121 B.R. at 765. In that regard, a disclosure statement must “inform the 

reader what the undisputed claims are, what the disputed claims are, what effect, if any, there will 

be on the distribution if disputed claims are or are not allowed, and when will distribution be 

made.” In re Ferretti, 128 B.R. at 19 (emphasis added). 

32. Courts have recognized that litigation can pose a risk to the timing and receipt of 

distributions. For example, in In re Cardinal Congregate I, creditors argued that the debtor’s 

disclosure statement failed to “clearly advise creditors and interest holders of the risks and 

consequences associated with a possible delay in the ‘Effective Date’ of the [plan] because of an 

appeal or some other circumstance.” 121 B.R. at 766. The Court agreed and held that the debtor 

must “address the potential for postponement of the payment schedule proposed in the [plan] 

which might be occasioned if an order of confirmation is appealed.” Id. 

33. As discussed above, litigation outcomes are plainly germane to the size of 

distributions under the Title III Plan. See In re Ferretti, 128 B.R. at 19 (stating that disclosure 

 

27 To the extent that the claim amount is not presently ascertainable because FOMB may bring a claim 

objection under section 502(b), then page 26 of the Disclosure Statement should warn the Swap holders of 

such risk. 

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statement must inform the reader of “what effect, if any, there will be on the distribution if disputed 

claims are or are not allowed”). They are also clearly relevant to when Swap claim holders will 

receive the distributions. FOMB has indicated that it may pursue a claim objection to the general 

allowance of the Swap claims under section 502(b)(2). Does FOMB plan to do so prior to plan 

confirmation? And, if it does, how could it reasonably expect to adjudicate that dispute and any 

appeals before plan confirmation? Any such claim objection against the Swaps will present issues 

that are novel to these Title III cases, including specifically issues related to the Bankruptcy Code’s 

safe harbor provisions. Those safe harbors are of critical importance to the financial markets, and 

thus such issues will likely draw the interest of key swap market participants, who may wish to be 

heard in such disputes.28 Clearly, if that claim objection could not be litigated before plan 

confirmation (and there is substantial reason to doubt that it can be), then that could impact the 

Swap holders’ ability to receive distributions. If FOMB does intend to bring such actions, it needs 

to disclose (i) the nature of such action, (ii) when it will bring that action, (iii) whether that action 

will impact the size of distributions to classes under the Title III Plan, and (iv) whether the dispute 

(including all appeals) will be resolved prior to receipt of distributions on the effective date. 

34. If there is a risk that any such objection cannot be resolved—including appeals—

prior to the effective date, then the Disclosure Statement needs to disclose that risk. To the extent 

that PREPA believes that such dispute should not delay the effective date (and thus distributions 

under the Title III Plan), then the Disclosure Statement must disclose that as well, including when 

 

28 Given the importance of swaps, securities contracts, and commodities in the market, key trade groups 

(such as the ISDA, which authors master swap agreements that are used by swap participants, including 

PREPA) and the Securities and Exchange Commission have filed amicus briefs in a number of disputes 

concerning the safe harbor provisions. See, e.g., In re Nat’l Gas Distribs., LLC, 556 F.3d 247 (4th Cir. 

2009) (in dispute concerning section 546(g) safe harbor for swap, amicus brief was filed by the International 

Swaps and Derivatives Association, Inc.); Enron Creditors Recovery Corp. v. Alfa, SAB de CV, 651 F.3d 

329, 335 (2d Cir. 2011) (amicus briefs filed by SEC and trade groups); In re Tribune Co. Fraudulent 

Conveyance Litig., 818 F.3d 98, 119 (2d Cir. 2016) (amicus brief filed by SEC). 

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and how distributions will be made to Swap claim holders during the pendency of FOMB’s section 

502(b)(2) claim objection. Will those distributions be held in escrow or otherwise withheld, or 

will they be distributed to Swap claim holders with the requirement for an undertaking? The 

Disclosure Statement must answer those questions to allow the Swap claim holders to properly 

assess and make an informed decision about the Title III Plan. 

II. Matured Bonds No Longer Held through DTC Should be Voted by Ballot Rather than 

Through ATOP. 

35. The proposed Disclosure Statement Order proposes that, in the case of uninsured 

bonds, the “Beneficial Owners” will vote such bonds by tendering them using the Automated 

Tender Offer Program (“ATOP”), a service available to users of DTC. See, e.g., Proposed 

Disclosure Statement Order ¶¶ 32 & 36. As a practical matter, this proposal will not work in the 

case of bonds formerly insured by Assured in the primary market that have matured during the 

pendency of PREPA’s Title III case. In the case of such matured bonds, Assured paid the principal 

amount to the former beneficial owners at maturity, thereby satisfying and discharging Assured’s 

obligations under the applicable insurance policies and rendering the bonds uninsured. Because 

Assured paid the principal amount at maturity, DTC no longer recognizes the bonds as outstanding, 

and it is no longer possible to take any actions with respect to such bonds by way of DTC, including 

ATOP. However, the applicable insurance agreements provide that (i) as a legal matter, the bonds 

remain outstanding as against PREPA, regardless of whether they appear on DTC, and (ii) Assured 

became the holder of the bonds through subrogation upon paying the principal amount at maturity. 

36. After becoming subrogated to the rights of the former beneficial holders upon 

paying the relevant bonds at maturity, Assured subsequently sold the claims arising from certain 

of these matured bonds to other holders. See ECF Nos. 2711, 2713, 2713, and 2714 in Case 

Number 17-4780-LTS and ECF Nos. 20141, 20142, 20143, and 20144 in Case Number 17-3283-

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LTS. Assured has not transferred all of the claims arising from such matured bonds, however, and 

Assured remains the holder of certain of the relevant claims. 

37. Regardless of whether such claims arising from matured bonds are held by Assured 

or by a transferee of Assured, it is no longer possible for such claims to be voted through ATOP, 

as the corresponding bonds no longer appear in DTC. Therefore, the holders of such claims should 

be permitted to vote them by ballot rather than through ATOP. Assured has proposed revisions to 

paragraphs 32 and 36 of the Disclosure Statement Order to permit such claims arising from 

matured bonds to be voted by ballot rather than through ATOP, as reflected in the revised proposed 

order attached as Exhibit B hereto. Absent such revisions, the Motion should be denied for the 

additional reason that it fails to provide appropriate voting procedures for all claimants. 

III. Joinder to Ad Hoc Group Objection 

38. In addition to the issues raised in this Objection, the relief sought in the Motion 

should be denied for additional reasons set forth in the Ad Hoc Group Objection, including among 

other things, because (i) the Title III Plan is patently unconfirmable, (ii) the Disclosure Statement 

fails to provide “adequate information” as required by Bankruptcy Code Section 1125 with respect 

to the treatment of PREPA’s revenue bonds, and (iii) the Motion’s proposed solicitation and Title 

III Plan confirmation procedures are prejudicial to Assured and other creditors. Assured hereby 

joins in and incorporates by reference the substance of the arguments set forth in the Ad Hoc Group 

Objection, other than any portions addressing a settlement or potential settlement with National 

Public Finance Guarantee. 

RESERVATION OF RIGHTS 

39. Assured reserves the right to (i) amend or supplement this Objection in the event 

FOMB files a further amended plan, disclosure statement, or proposed Disclosure Statement 

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Order, (ii) join in any objection to the Disclosure Statement or related motions filed by any other 

party in interest, (iii) raise additional objections, arguments, or authorities not incorporated herein, 

and (iv) raise the objections, arguments, and authorities contained herein in connection with 

confirmation of the proposed Title III Plan or any other plan proposed in these proceedings, as 

well as any additional arguments relevant to confirmation. 

CONCLUSION 

40. FOMB must revise the Disclosure Statement to provide the information described 

in this Objection, and must revise the proposed Disclosure Statement Order to provide appropriate 

voting rights to holders of claims arising from matured bonds. In the absence of such necessary 

revisions, Assured respectfully submits that this Court should deny approval of the Disclosure 

Statement. 

Dated: New York, New York 

February 3, 2023 

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22 

CASELLAS ALCOVER & BURGOS 

P.S.C. 

By: /s/ Heriberto Burgos Perez 

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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CERTIFICATE OF SERVICE 

I hereby certify that I filed this document electronically with the Clerk of the Court for the 

United States District Court for the District of Puerto Rico by using the CM/ECF system, which 

will send notification of such filing to all parties of record in the captioned case. 

At New York, New York, the 3rd day of February, 2023. 

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

Howard R. Hawkins, Jr.* 

* admitted pro hac vice 

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