220810 ORD RE SUPP BRIEFING ON IBG OBJ VERSION AUGUST 10, 2022 1

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 HIGHWAYS AND 

TRANSPORTATION AUTORITY,

Debtor.

PROMESA 

Title III

No. 17 BK 3567-LTS

ORDER TO SUPPLEMENT BRIEFING OF LIMITED OBJECTION OF THE 

HTA INSURED BONDHOLDER GROUP TO THE THIRD AMENDED TITLE III PLAN OF 

ADJUSTMENT OF THE PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY

The Court has received and reviewed the Limited Objection of the HTA Insured 

Bondholder Group to the Third Amended Title III Plan of Adjustment of the Puerto Rico 

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 (“Commonwealth”) (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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Highways and Transportation Authority (Docket Entry No. 21617 in Case No. 17-3283 and 

Docket Entry No. 1301 in Case No. 17-3567) (the “IBG Objection”), the Reply of Assured 

Guaranty Corp. and Assured Guaranty Municipal Corp. to Limited Objection of the HTA 

Insured Bondholder Group to the Third Amended Title III Plan of Adjustment of the Puerto Rico 

Highways and Transportation Authority (Docket Entry No. 21768 in Case No. 17-3283 and 

Docket Entry No. 1349 in Case No. 17-3567) (the “Assured Reply”), and the Omnibus Reply to 

Objections to Confirmation of the Fourth Amended Title III Plan of Adjustment of the Puerto 

Rico Highways and Transportation Authority (Docket Entry No. 21779 in Case No. 17-3283 and 

Docket No. 1361 in Case No. 17-3567) (the “HTA Omnibus Reply”). 

The Court hereby orders the HTA Insured Bondholder Group,2 Assured, and the 

Oversight Board to file supplemental briefing as follows, by August 13, 2022, at 5:00 p.m.

(Atlantic Standard Time). The parties are directed to address the following issues (with 

supporting legal and factual citations as necessary):

1) HTA Insured Bondholder Group. Please address the following:

a) Please review the following bolded language from the definition of “Due for 

Payment” from Appendix XII to the Puerto Rico Highways and Transportation 

Authority Official Statement, dated February 15, 2007 (filed as Exhibit 1 to 

Docket No. 21619 in Case No. 17-3283 and Docket No. 1303 in Case No. 17-

3567), as quoted at paragraphs 4 and 20 in the IBG Objection, and in 

paragraphs 1, 15, and 16 of the Assured Reply:

‘Due for Payment’ means, when referring to the principal of a Bond,

the stated maturity date [of the bond], or the date on which such 

Bond shall have been duly called for mandatory sinking fund 

redemption, and does not refer to any earlier date on which payment 

is due by reason of a call for redemption (other than by mandatory 

sinking fund redemption), acceleration or other advance of maturity

(unless Assured Guaranty in its sole discretion elects to make 

any principal payment, in whole or in part, on such earlier date)

and means, when referring to interest on a Bond, the stated date for 

payment of such interest.

i) Does the bolded language enable Assured to pay off all or part of the 

principal at will, and under what circumstances? If Assured could and did

pay off all of the principal, what, if any, further liability would Assured 

have under the insurance policies? Please provide examples.

ii) Would the bolded language permit Assured to accelerate the payoff of 

principal in connection with a bond issuer’s bankruptcy filing?

2 Capitalized terms used but not defined herein have the meaning ascribed to them in the 

IBG Objection.

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iii) If so, and if Assured could have made the election of a full payment on the 

date of the bankruptcy (“such earlier date”), could Assured also make the 

election several years later, on the effective date of a plan of adjustment?

b) Assured argues, at paragraph 30 and footnote 19 of the Assured Reply, that “in 

purchasing their Assured Insured Bonds and receiving the benefits of the Assured 

Insurance Policies, [the HTA Bondholder Group] agreed to give Assured the right 

to control consent and voting rights with respect to those bonds” specifically in 

the event of a reorganization or liquidation. Why is the quoted insurance 

agreement provision not dispositive of Assured’s right to agree to the HTA Plan 

(including the principal payment provision) on behalf of Assured bondholders? 

2) Assured. Please address the following:

a) Please respond to 1(a)(iii) above.

b) The HTA Insured Bondholder Group argues at paragraph 19 and footnote 15 of 

the IBG Objection that automatic acceleration of a debt to a debtor upon a 

bankruptcy filing applies only with respect to the debtor and only for a limited 

purpose. Please provide support for the argument, if intended, that bankruptcyrelated acceleration applies to debts owed by non-debtors to non-debtors.

c) If it is Assured’s argument that bankruptcy is one of several possible grounds for 

acceleration by force of law and regardless of contrary contract terms, please 

provide examples of another bankruptcy or other event triggering an acceleration 

election otherwise expressly excluded from the terms of an underlying contract.

d) Please provide support for the apparent argument, if intended, in paragraph 19 of 

the Assured Reply that N.Y. Ins. Law § 6905 (or the above bolded language in the 

definition of “Due for Payment”) provides an independent basis to accelerate a 

debt rather than only providing insurers a defense to acceleration. 

e) Paragraph 19 of the IBG Objection discusses Section 26.1(d) of the HTA Plan, 

providing that, “on the HTA Effective Date, HTA shall be deemed to have 

assigned to Assured any rights to redeem and call the Assured Insured Bonds[.]” 

The HTA Insured Bondholder Group questions both the validity of this 

assignment and what rights exist to be transferred. Please address the basis upon 

which any right to redeem, call, or accelerate debts held by a debtor by virtue of 

its bankruptcy filing could then be assigned to a non-debtor third party. 

3) Oversight Board. In addition to addressing any or all of the above, please address

the following:

a) The HTA Insured Bondholder Group’s argument that the HTA Plan is not 

confirmable unless modified.

b) The Oversight Board’s position on the third-party releases Assured has 

conditionally suggested for addition to the HTA Plan. Please address this issue in 

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the context of the present objection, as opposed to provisions of prior plans that 

were not the subject of objections. (HTA Omnibus Reply Ex. C at 5–6.)

SO ORDERED.

Dated: August 10, 2022

 /s/ Laura Taylor Swain 

LAURA TAYLOR SWAIN

United States District Judge

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