UNITED STATES DISTRICT COURT

DISTRICT OF PUERTO RICO

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In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al.,

Debtors.1

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PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

STATUS REPORT OF FINANCIAL OVERSIGHT AND MANAGEMENT 

BOARD IN CONNECTION WITH FEBRUARY 1–2, 2023 OMNIBUS HEARING 

To the Honorable United States District Court Judge Laura Taylor Swain:

The Commonwealth of Puerto Rico (the “Commonwealth”), the Puerto Rico Highways 

and Transportation Authority (“HTA”), the Employees Retirement System of the Government of 

the Commonwealth of Puerto Rico (“ERS”), the Puerto Rico Electric Power Authority 

(“PREPA”), and the Puerto Rico Public Buildings Authority (“PBA,” and together with the 

Commonwealth, HTA, ERS, and PREPA, the “Debtors”), by and through the Financial Oversight 

and Management Board for Puerto Rico (the “Oversight Board”), as sole Title III representative 

of the Debtors pursuant to Section 315(b) of the Puerto Rico Oversight, Management, and 

Economic Stability Act (“PROMESA”), respectfully submit this Status Report in connection with 

 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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the February 1–2, 2023 omnibus hearing and in response to this Court’s order, dated January 13, 

2023 [Case No. 17-BK-03283, ECF No. 23253].

I. General Status and Activities of the Oversight Board

New Executive Director 

1. The Oversight Board is extremely proud that Robert F. Mujica Jr. became its new 

Executive Director as of January 1, 2023, and had been following Board activities for several 

weeks of orientation so that he could hit the ground running. Previously, Mr. Mujica was the 

Director of the Budget for New York State. Mr. Mujica also served as a Board Member of the NY 

Metropolitan Transportation Authority and a Trustee of the City University of New York, and 

served for nineteen years in senior executive capacities supporting the New York State Senate.

HTA Plan of Adjustment

2. The Oversight Board remains focused on achieving its mandates under PROMESA 

so that fiscal responsibility, access to capital markets, and economic prosperity and growth can 

return to Puerto Rico. To those ends, the Oversight Board proposed the Fifth Amended Title III 

Plan of Adjustment of the Puerto Rico Highways and Transportation Authority [Case No. 17-BK03567, ECF No. 1377] (as amended, supplemented, or modified, the “HTA Plan of Adjustment”) 

for confirmation pursuant to Title III of PROMESA. On October 12, 2022, the Court confirmed 

the HTA Plan of Adjustment (the “HTA Confirmation Order”). 

Appeals from the HTA Confirmation Order

3. On October 24, 2022, the plaintiffs in Vazquez Velazquez v. P.R. Highways & 

Transp. Auth. [Case No. 21-1739, Docket Entry No. 1287] (the “Vazquez Velazquez Objection,” 

and an objector to the HTA Plan of Adjustment, the “Vazquez Velazquez Group”) filed a notice 

of appeal to the United States Court of Appeals for the First Circuit (the “First Circuit”) [Case No. 

17-BK-03567, ECF No. 1423]. The Vazquez Velazquez Group argues that their asserted claims 

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were improperly classified in Class 16 (HTA General Unsecured Claims) and that the HTA Plan 

of Adjustment should be amended to have their asserted claims placed into a separate class of 

nondischargeable claims. In confirming the HTA Plan of Adjustment, the Court overruled the 

Vazquez Velazquez Objection, holding the Vazquez Velazquez Group’s claims, which arise from 

litigation concerning a discontinued HTA compensation program, are not exempt from discharge, 

and thus are not “substantially dissimilar” to the other general unsecured claims in the class. See 

Findings of Fact and Conclusions of Law in Connection with Confirmation of the Modified Fifth 

Amended File III Plan of Adjustment of the Puerto Rico Highways and Transportation Authority 

[Case No. 17-BK-03567, ECF No. 1416], ¶ 114 n.14. The Vazquez Velazquez Group also 

concurrently filed a motion to stay confirmation of the HTA Plan of Adjustment pending appeal 

[Case No. 17-BK-03567, ECF No. 1424]. 

4. In accordance with the Court’s briefing order [Case No. 17-BK-03567, ECF No. 

1425], on October 28, 2022, the Oversight Board and certain monoline insurers filed their 

oppositions to the Vazquez Velazquez Group’s motion to stay the effectiveness of the HTA 

Confirmation Order and the consummation of the HTA Plan of Adjustment [Case No. 17-BK03567, ECF Nos. 1432, 1434]. Similarly, on October 31, 2022, the Vazquez Velazquez Group 

filed a reply in support of its motion [Case No. 17-BK-03567, ECF No. 1435].

5. On November 15, 2022, the Court denied the Vazquez Velazquez Group’s motion 

to stay confirmation of the HTA Plan pending appeal. [Case No. 17-BK-03567, ECF No. 22867]. 

On November 21, 2022, after failing to obtain a stay pending appeal from this Court, the Vazquez 

Velazquez Group filed a motion to stay confirmation of the HTA Plan of Adjustment pending 

appeal with the First Circuit [Case No. 22-1829, Doc. 00117945812]. Following briefing on the 

issue, the Vazquez Velazquez Group filed a withdrawal of its request for a stay pending appeal. 

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On November 30, 2022, the First Circuit granted the Vazquez Velazquez Group’s request to 

withdraw their motion for a stay pending appeal [Case No. 22-1829, Doc. 00117949042]. Briefing 

with respect to the merits of the Vazquez Velazquez appeal continues.

6. On December 6, 2022, the HTA Plan of Adjustment became effective. The 

transactions therein significantly lessen HTA’s debt burden by reducing HTA’s funded debt by 

seventy-five percent (75%), from approximately $6.4 billion to $1.245 billion senior and $359 

million subordinate HTA toll road-supported debt. The substantial consummation of the HTA 

Plan of Adjustment represents a significant achievement in advancing Puerto Rico’s public policy 

objective to attain fiscal responsibility and to access the capital markets, and will promote better 

and safer roads across Puerto Rico and more efficient commerce.

HTA Budget

7. The Oversight Board remains focused on developing and certifying budgets for the 

fiscal year 2023. On October 22, 2022, the Oversight Board certified an amended fiscal 2023 

budget for HTA. The amended HTA budget includes a new section establishing that the funds 

allocated under the “Reserve Deposits for POA” are to be kept in an interest-bearing account, 

separate from all other accounts currently in use by HTA, with that account funded in compliance 

with the requirements set forth in the HTA Plan of Adjustment and new HTA bonds indenture and 

is to be used for the sole purpose of meeting the obligations specified in the HTA Plan of 

Adjustment and bonds indenture. On December 2, 2022, in anticipation of the HTA Effective 

Date, the Oversight Board certified a further amended fiscal 2023 budget for HTA with limited 

revisions reflecting incremental reserve and escrow account funding in accordance with the HTA 

Plan of Adjustment. 

Recent First Circuit Decisions

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8. On May 17, 2022, the First Circuit, in Centro De Periodismo Investigativo, Inc. v. 

Financial Oversight And Management Board For Puerto Rico [Case No. 21-1301, Doc. 

00117876976], held (two to one) that Congress, through PROMESA section 106, abrogated the 

Oversight Board’s sovereign immunity from being sued in federal court on a Commonwealth 

claim. The Oversight Board filed a petition for rehearing en banc [Case No. 21-1301, Doc. 

00117882073], which was denied two to one on June 7, 2022 [Case No. 21-1301, Doc. 

00117884913]. The only two judges in regular service who were not on the panel that decided the 

case turned out to be recused from voting on the rehearing. On June 14, 2022, the Oversight Board 

filed a motion requesting that the First Circuit stay the mandate, as the Oversight Board planned 

to file a petition for a writ certiorari to the United States Supreme Court seeking review of the 

First Circuit’s decision. On June 21, 2022, the First Circuit granted a stay of the mandate pending 

U.S. Supreme Court review if the Oversight Board filed its petition for a writ of certiorari on or 

before July 20, 2022. On July 20, 2022, pursuant to the First Circuit’s order, the Oversight Board 

petitioned the Supreme Court for a writ of certiorari to review the First Circuit’s decision. On 

October 3, 2022, the Supreme Court granted the Oversight Board’s petition for a writ of certiorari. 

Accordingly, the action in the District Court remains stayed pending the Supreme Court’s review. 

On January 11, 2023, the Supreme Court heard oral argument and has not yet issued a ruling. 

9. On February 17, 2022, the Oversight Board appealed the portion of the Order and 

Judgment Confirming Modified Eighth Amended Title III Joint Plan of Adjustment of the 

Commonwealth of Puerto Rico, the Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico, and the Puerto Rico Public Buildings Authority [Case No. 17-BK03283, ECF No. 19813] (the “Commonwealth Confirmation Order”), and the corresponding 

findings of fact and conclusions of law, holding that the Takings Clause of the Fifth Amendment 

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prohibits the impairment or discharge in bankruptcy of prepetition unsecured claims for just 

compensation for takings. On July 18, 2022, the First Circuit, in Financial Oversight & 

Management Board for Puerto Rico v. Cooperative de Ahorro y Credito Abraham Rosa [Case No. 

22-1119, Doc. 00117899244], affirmed the Commonwealth Confirmation Order and the 

corresponding findings of fact and conclusions of law. 

10. On October 17, 2022, the Oversight Board petitioned the Supreme Court for a writ 

of certiorari to review the First Circuit’s decision. The petition highlights three primary reasons 

for granting review. First, it argues the First Circuit’s decision creates a circuit split on the 

dischargeability of unsecured just-compensation claims under the Fifth Amendment, which is an 

issue of “exceptional importance.” Second, it argues the First Circuit’s decision is inconsistent 

with two lines of constitutional precedent involving the Takings Clause and the bankruptcy power. 

The petition explains the First Circuit erroneously held the Fifth Amendment conflicts with the 

bankruptcy power, as opposed to the Fifth Amendment creating a claim before bankruptcy and the 

bankruptcy power restructuring and discharging it. Third, it argues the dischargeability of 

unsecured claims for just compensation has “enormous” financial implications for municipalities 

seeking to restructure debt. On January 09, 2023, respondents filed their briefs in opposition to 

the Oversight Board’s petition. On January 25, 2023, the Oversight Board filed its reply brief. A 

decision on the Oversight Board’s petition is anticipated the week of February 20, 2023.

II. General Status of Relations Among the Oversight Board and Commonwealth and 

Federal Governments

PFC QM

11. The Oversight Board, AAFAF, and PFC Bond Trustee have been working 

collaboratively on the Puerto Rico Public Finance Corporation’s Title VI case. On December 14, 

2022, the Court held a hearing to consider approval of the Qualifying Modification Pursuant to 

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PROMESA Title VI for the Puerto Rico Public Finance Corporation (the “PFC QM”). On 

December 30, 2022, the Court approved the PFC QM [Case No. 22-01517, ECF No. 78] (the “PFC 

Approval Order”). The PFC QM became effective on January 12, 2023. [Case No. 22-01517,

ECF No. 80]. Pursuant to the PFC QM and PFC Approval Order, approximately $13.8 million 

was distributed to holders of certain bonds issued by the Puerto Rico Public Finance Corporation

(the “PFC Bonds”) and the trustee for the PFC Bonds. 

12. Pursuant to a joint stipulation approved on December 1, 2022 [Case No. 22-01517, 

ECF No. 32], the Oversight Board, with the assent of AAFAF, and Cantor-Katz Collateral Monitor 

LLC, as Collateral Monitor (the “Collateral Monitor”) for the holders of bonds issued by the GDB 

Debt Recovery Authority (the “DRA Bonds”), are proceeding with the determination of whether 

additional DRA Bonds may be issued as contemplated by the PFC QM (the “DRA Bond Issue”) 

on a separate schedule. The DRA Bond Issue has been fully briefed and remains pending. On 

January 23, 2023, the Collateral Monitor filed an informative motion requesting the scheduling of 

oral argument regarding the DRA Bond Issue. Oral argument on the DRA Bond Issue is scheduled 

for May 10, 2023. [Case No. 22-01517, ECF No. 90]

PREPA

13. The Oversight Board continues to pursue approval of the proposed disclosure 

statement for PREPA’s proposed Title III plan of adjustment, while simultaneously negotiating 

with several creditors and pursuing resolution of major issues relating to the bondholders’ alleged 

security interests and claims. Oral argument on the parties dueling summary judgment motions is 

scheduled for February 1, 2023. The Court has scheduled a confirmation hearing for July 2023 

and the Oversight Board will continue to work to minimize the number of contested issues at that 

hearing. Notably, the Court extended the mediation through April 2023, and the Oversight Board 

hopes the extension and the holding of the oral argument will spur all parties, through negotiation 

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and mediation, to reach consensus. In connection with the mediation, at the last omnibus hearing 

on December 14, 2023, there was questioning and colloquy among the Court, the mediators, 

counsel for certain bondholders, and the Board’s attorney, Martin Bienenstock, concerning the 

Board’s unopposed, urgent motion requesting a further extension of the PREPA Plan-related 

deadlines to allow for further steps in mediation [Case No. 17-BK-03283, ECF No. 23064]. Mr. 

Bienenstock explained, among other things, that information had been requested from the Board 

on Monday December 12 and produced on December 12, and also explained that if the right Board 

representatives had realized the Board had the information earlier, it would have been produced 

earlier. All of that remains accurate, but, to the extent Mr. Bienenstock’s statement that the 

information was requested the prior Monday gave the impression it had not been requested earlier, 

Mr. Bienenstock desires to clarify that statement. In fact, the information the Board produced on 

December 12 and into the morning on December 13 had been requested earlier. 

Legislation

14. The Oversight Board’s relationship with the Government of Puerto Rico (the 

“Government”) continues to be collaborative and the Oversight Board is working closely with 

Puerto Rico Governor Pedro R. Pierluisi and the rest of the Commonwealth administration. The 

Oversight Board and Government remain in agreement that the health, safety, and economic 

welfare of the people of Puerto Rico must be the priority. Governor Pierluisi is serving as his own 

ex officio representative on the Oversight Board, which affords more opportunity for direct 

interactions, and sharing of viewpoints and insights on important issues. The Governor and 

Oversight Board, however, continue to disagree on various pieces of significant legislation. 

Act 41

15. The Oversight Board is committed to ensuring the Government’s compliance with 

PROMESA in proposing and enacting legislation because the Oversight Board’s statutory mission

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cannot be carried out when legislation impedes PROMESA’s purposes. On June 20, 2022, the 

Government enacted Act 41-2022 (“Act 41”), formerly known as House Bill 1244, which is 

inconsistent with the Commonwealth’s certified fiscal plan (“Commonwealth Fiscal Plan”) and 

impairs or defeats PROMESA’s purposes. In short, Act 41 reestablishes many of the burdensome 

labor restrictions existing before enactment of Act 4-2017, and will hinder Puerto Rico’s economic 

growth and job creation by, among other things, reintroducing the presumption that employee 

dismissals are unjustified, increasing sick and vacation day accrual rates, and easing eligibility 

requirements for Christmas bonuses. The Oversight Board had previously advised the 

Government the enactment, implementation, and enforcement of House Bill 1244 was barred by 

PROMESA § 108(a)(2). Nevertheless, the Governor proceeded to sign the law notwithstanding 

PROMESA § 108(a)(2), knowing its implementation could not be stopped as its provisions are

enforced by private parties, not the Government. This was done notwithstanding the terms of 

PROMESA § 108(a)(2) barring the Governor from enacting statutes the Oversight Board has 

determined impair or defeat PROMESA’s purposes. Thereafter, on June 29, 2022, the 

Government made a submission regarding Act 41 pursuant to PROMESA § 204(a). As the 

Oversight Board informed the Government on July 19, 2022, the submission was deficient in 

numerous respects, in that it failed to provide a formal estimate of the law’s impact on 

Commonwealth expenditures for the correct fiscal years (it provided an estimate (defective) for 

the prior fiscal plan year) and did not include a certification that the law is or is not significantly 

inconsistent with the certified fiscal plan. Despite extensive correspondence, on August 1, 2022, 

Governor Pierluisi rejected the Oversight Board’s proposed consent order suspending Act 41 to 

enable the parties to avoid litigation. On September 1, 2022, the Oversight Board filed an 

adversary proceeding seeking declarative and injunctive relief pursuant to PROMESA to nullify 

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and enjoin Act 41. See Adv. Proc. No. 22-00063 [ECF No. 1]. Pursuant to the parties’ agreement 

and the Court’s September 9, 2022 order, the Governor filed an answer to the Oversight Board’s 

complaint on September 15, 2022. On September 14, 2022, the Court issued an order setting an 

expedited summary judgment briefing schedule. Pursuant to that order, the Oversight Board filed 

a motion for summary judgment and the Governor filed a motion for judgment on the pleadings 

on September 29, 2022. The Governor and the Speaker of the Puerto Rico House of 

Representatives (the “Speaker”)2 filed oppositions to the Oversight Board’s motion for summary 

judgment, and the Oversight Board filed an opposition to the Governor’s motion for judgment on 

the pleadings. On October 21, 2022, the parties filed replies in support of their respective motions.3 

Act 5-2023 (formerly Senate Bill 552)

16. On November 15, 2022, the Puerto Rico Senate (the “Senate”) and the Puerto Rico 

House of Representatives (the “House”) voted to enact Senate Bill 552 (“SB 552”), which is 

inconsistent with the Commonwealth Fiscal Plan. SB 552, among other things, amends 

Act 60-2019, known as the “Puerto Rico Incentives Code,” to increase the current cap on certain 

film industry tax incentives from $38 million to $100 million per year. The Commonwealth Fiscal 

Plan requires that “any tax reform or tax law initiative that the Government undertakes or pursues 

during a year within the 2022 Fiscal Plan period must be revenue neutral, that is, all tax reductions 

must be accompanied by specific, offsetting revenue measures of the same amount identified in 

the enabling legislation.” See Certified Commonwealth Fiscal Plan at 299. The Oversight Board 

has found no evidence indicating the incremental tax incentives would attract additional filmmaking sufficient to create revenues and taxes to offset the cost of SB 552. Indeed, the current tax 

 2 On October 5, 2022, the Court issued an order granting the Speaker’s motion to intervene in the adversary 

proceeding. 

3 The Speaker filed a motion to join in the Governor’s motion for judgment on the pleadings, and filed a reply in 

support of that motion on October 20, 2022. 

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incentives for film production in Puerto Rico—capped at $38 million—are not revenue neutral, 

costing the Commonwealth approximately $23 million annually. SB 552 would reduce 

Commonwealth revenues and does not identify offsets from spending reductions and/or revenue 

increases to address the current $23 million shortfall or the increased shortfall created by SB 552 

in violation of the Commonwealth Fiscal Plan. On April 1, 2022, the Oversight Board sent a letter 

to Senator Zaragoza Gómez informing the Legislature that the then-current version of SB 552 was 

inconsistent with the Commonwealth Fiscal Plan because it failed to include sufficient offsetting 

revenues or expenditure reductions. Notwithstanding the Oversight Board’s letter, the Legislature 

amended SB 552 to remove the few offsets previously included. On December 8, 2022, the 

Oversight Board sent a letter to the Governor reiterating its concerns about SB 552 and its 

conclusion that the bill is inconsistent with the Commonwealth Fiscal Plan and violates 

PROMESA. On December 28, 2022, the Oversight Board sent a letter to the Governor 

(i) reiterating that SB 552 violates the certified Commonwealth Fiscal Plan and multiple provisions 

of PROMESA; (ii) informing the Governor the Oversight Board had determined, pursuant to 

PROMESA § 108(a)(2), that SB 552 impairs or defeats PROMESA’s purposes; and (iii) informing 

the Governor that PROMESA § 108(a)(2) barred him from signing SB 552. The Governor signed 

SB 552 into law on January 9, 2023, enacting the Bill as Act 5-2023. Based on AAFAF’s 

representations that the law is not currently in effect and cannot go into effect absent the issuance 

of implementing regulations subject to prior Oversight Board review and approval, the Oversight 

Board is awaiting the Governor’s submission pursuant to PROMESA § 204(a), and looks forward 

to engaging with the Governor through the PROMESA § 204(a) process. Based on the results of 

that process, the Oversight Board will take appropriate action.

Act 104-2022

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17. On November 10, 2022, the Senate and the House approved House Bill 1119

(“HB 1119”) and the Governor signed it into law as Act 104-2022 (“Act 104”) on 

December 14, 2022.4 Act 104, among other things, amends Act 11-1933, also known as the 

“Gaming Machine Act,” to reduce the license fee for gaming machines from $1,500 to $250, 

reduce the tax imposed on gambling winnings, alter the current distribution of revenues derived 

from gaming machines in a manner depriving the General Fund of revenues, and modify the 

requirements for the centralized computer connectivity system for gambling machines in the 

Commonwealth. Act 104 is inconsistent with the Commonwealth Fiscal Plan because it would 

reduce Commonwealth revenues without providing offsetting savings or alternative revenues. 

Based on AAFAF’s representations that the law is not currently in effect and cannot go into effect 

absent the issuance of implementing regulations subject to prior Oversight Board review and 

approval, the Oversight Board is awaiting the Governor’s submission pursuant to PROMESA 

§ 204(a), and looks forward to engaging with the Governor through the PROMESA § 204(a) 

process. Based on the results of that process, the Oversight Board will take appropriate action.

Act 80

18. On July 21, 2022, the Oversight Board and AAFAF reached an agreement on a path 

for the partial implementation of Act 80-2020, which agreement would allow implementation of 

the early retirement program contemplated under the law for certain non-essential employees. The 

Oversight Board and the Government continue to work together to implement the agreement 

reached in July 2022. 

Senate Bill 465

 4 On the same day the Governor signed the bill into law, the Oversight Board sent a letter to the Governor urging him 

not to sign HB 1119. On December 19, 2022, the Oversight Board sent a letter to the Governor noting that he had 

enacted Act 104 prior to receiving the Oversight Board’s letter, reiterating the Oversight Board’s concerns, and 

confirming the steps required before the Act may be implemented. 

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19. Senate Bill 465 (“SB 465”), among other things, would establish the Puerto Rico 

Guards Reserve to be comprised of former PREPA line guards currently working in other 

Commonwealth functions, and makes them available to be called up to act as guards by PREPA

for any reason or no reason. When called up, the Commonwealth would continue to pay them 

unless they become PREPA employees, but would not have them available for their current 

functions. SB 465 conflicts with the certified Commonwealth and PREPA fiscal plans by 

expanding PREPA’s role in day-to-day operations, interfering with the transition of PREPA’s grid 

assets to private operators, and driving up labor costs for Commonwealth agencies. On 

December 12, 2022, the Oversight Board sent a letter to the Governor: (i) explaining that SB 465

violates the certified fiscal plan for PREPA; (ii) informing the Governor the Oversight Board had 

determined, pursuant to PROMESA § 108(a)(2), that SB 654 impairs or defeats PROMESA’s 

purposes; and (iii) informing the Governor that PROMESA § 108(a)(2) barred him from signing 

SB 465. On December 21, 2022, the Legislature sent SB 465 for signature or veto. Prior to a 

determination by the Governor, on January 17, 2023, the Legislature initiated a process to 

reconsider the measure. The Oversight Board continues to monitor and will take appropriate 

action. 

Five Laws Litigation

20. On June 12, 2020, the Governor and AAFAF filed adversary complaints seeking 

declaratory judgments that Acts 82, 138, 176, and 181 of 2019 and Act 47 of 2020 satisfied 

PROMESA’s requirements. See Adv. Proc. Nos. 20-00080 [ECF No. 1], 20-00081 [ECF No. 1], 

20-00082 [ECF No. 1], 20-00083 [ECF No. 1], 20-00084 [ECF No. 1], 20-00085 [ECF No. 1]. In 

short, Act 47 expanded the group of health professionals eligible for tax benefits under the Puerto 

Rico Incentives Code, reducing revenues without any offsetting cost savings. Act 82 prevented 

Pharmacy Benefit Managers from controlling the cost of prescription medications. Act 138 forced 

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public health insurance companies such as MCOs to accept into their networks all medical 

providers regardless of price. Act 176 increased the accrual rate for vacation days and sick days 

for public employees. Act 181 provided for a salary increase to firefighters amounting to almost 

$3 million per year. 

21. On July 17, 2020, the Oversight Board filed answers and counterclaims seeking to 

nullify and enjoin the five Acts including on the grounds that the Acts impaired and defeated the 

purposes of PROMESA because they were not revenue neutral and undermined the Government’s 

ability to control certain costs. The Oversight Board moved for summary judgment and the Title 

III Court granted the motion, entering an order enjoining future implementation of the Acts. With 

respect to Act 181, which increased the salaries of firefighters, the parties agreed that to the extent 

revenues from tax on insurance premiums and certain safety inspections covered the cost, the 

Oversight Board would have no further objection to the Act. The Government appealed the 

Court’s ruling on the remaining four laws.

22. On June 22, 2022, the First Circuit affirmed the Title III Court’s ruling enjoining 

Acts 47, 82, 138 and 176. On November 18, 2022, the Government filed a petition for a writ of 

certiorari with the Supreme Court of the United States. The laws remain enjoined unless and until

the Supreme Court agrees to review the matter and issues an order to the contrary.

House Joint Resolution 249

23. House Joint Resolution 249 (“HJR 249”), among other things: (i) requires the 

Puerto Rico Aqueduct and Sewer Authority (“PRASA”), LUMA Energy LLC (“LUMA”), and 

PREPA to establish a “voluntary” twelve-month moratorium on payments and rate increases for 

water and electricity services; (ii) forbids PRASA, LUMA, and PREPA from collecting surcharges 

and penalties or suspending services for failure to pay electricity and water bills due to the COVID19 health emergency; and (iii) prohibits HTA from increasing tolls on the Island for twelve months 

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from the enactment of HJR 249. HJR 249 violates PROMESA and the certified fiscal plans of 

PRASA, HTA, and PREPA by, among other things: (i) depriving PREPA and PRASA of the 

ability to increase rates and collect revenues; (ii) interfering with PREB’s authority as an 

independent regulator; (iii) depriving HTA of revenue and interfering with the authority of HTA 

to set rates, (iv) usurping the Oversight Board’s powers under PROMESA to propose a Title III 

plan requiring rate increases to pay debt, and (v) interfering in fiscal plans and budgets exclusively 

within the Oversight Board’s controls granted by PROMESA. On November 15, 2022, the 

Oversight Board sent a letter to the Governor: (i) explaining that HJR 249 violates the certified 

fiscal plans for HTA, PRASA, and PREPA; (ii) informing the Governor the Oversight Board had 

determined, pursuant to PROMESA § 108(a)(2), that HJR 249 impairs or defeats PROMESA’s 

purposes; and (iii) informing the Governor that PROMESA § 108(a)(2) bars him from signing 

HJR 249. On November 18, 2022, the Legislature sent HJR 249 to the Governor, who declined to 

sign the bill—pocket-vetoing the measure.

Senate Joint Resolution 327

24. Senate Joint Resolution 327 (“SJR 327”), among other things, would require the 

Puerto Rico Energy Bureau of the Puerto Rico Public Service Regulatory Board to submit to the 

legislature, within 20 days of SJR 327’s enactment, “a detailed report of the compliance metrics 

adopted to measure the proper execution of the contract awarded to LUMA” and sets out 

parameters and metrics of “additional compliance that should be required from a new operator in 

the face of the possible cancellation of the contract” with LUMA. SJR 327 undermines efforts to 

transform PREPA and interferes with the LUMA contract—an essential part of the certified 

PREPA Fiscal Plan (“PREPA Fiscal Plan”) requirements regarding the transition of PREPA’s 

transmission and distribution (“T&D”) and generation assets to private operators. On November 

12, 2022, the Oversight Board sent a letter to the Governor: (i) explaining that SJR 327 violates 

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the PREPA Fiscal Plan; (ii) informing the Governor the Oversight Board had determined, pursuant 

to PROMESA § 108(a)(2), that SJR 327 impairs or defeats PROMESA’s purposes; and 

(iii) informing the Governor that PROMESA § 108(a)(2) bars him from signing SJR 327. The 

Governor did not sign the bill—pocket-vetoing the measure.

House Joint Resolution 315

25. House Joint Resolution 315 (“HJR 315”), among other things, (i) purports to 

require the termination of the Operation and Management Agreement (“OMA”) between PREPA 

and LUMA within sixty days of the HJR 315’s enactment for supposed breaches of contract by 

LUMA and its subsidiaries, and (ii) purports to order PREPA to administer the OMA during the 

sixty day transitionary period and subsequently take control of PREPA’s T&D operations. As 

clearly stated in the PREPA Fiscal Plan, LUMA’s continued operation of PREPA’s T&D system 

is required and is critical to the success of the fiscal plans and Puerto Rico’s energy future. On 

November 11, 2022, the Oversight Board sent a letter to the Governor: (i) explaining that HJR 315 

violates the certified fiscal plans for the Commonwealth and PREPA; (ii) informing the Governor 

the Oversight Board had determined, pursuant to PROMESA § 108(a)(2), that HJR 315 impairs 

or defeats PROMESA’s purposes; and (iii) informing the Governor that PROMESA § 108(a)(2) 

bars him from signing HJR 315. On November 18, 2022, the Legislature sent HJR 315 to the 

Governor, who declined to sign the bill—pocket-vetoing the measure.

House Bill 1397

26. House Bill 1397 (“HB 1397”), among other things, purports to exempt from the P3 

Authority’s (“P3A”) supervision all P3 contracts in which PREPA is the Participating Government 

Entity. HB 1397 appears to conflict with the efforts by the Government and the Oversight Board 

to reform the PREPA energy system over the past five years. On November 11, 2022, the 

Oversight Board sent a letter to the Governor: (i) explaining HB 1397 violates the PREPA Fiscal 

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Plan; (ii) informing the Governor the Oversight Board had determined, pursuant to PROMESA § 

108(a)(2), that HB 1397 impairs or defeats PROMESA’s purposes; and (iii) informing the 

Governor that PROMESA § 108(a)(2) bars him from signing HB 1397. On November 29, 2022, 

the Legislature sent HB 1397 to the Governor, who declined to sign the bill—pocket-vetoing the 

measure

House Joint Resolution 235

27. House Joint Resolution 235 (“HJR 235”) purports to, among other things, mandate 

the P3 Authority refrain from awarding an operation and maintenance or similar contract for the 

private operation of PREPA’s generation assets until July 1, 2023. HJR 235 appears to 

intentionally delay implementation of the PREPA Fiscal Plan requirements that PREPA assets be 

transitioned to private operation. On November 11, 2022, the Oversight Board sent a letter to the 

Governor: (i) explaining that HJR 235 violates the certified fiscal plans for the Commonwealth 

and PREPA; (ii) informing the Governor the Oversight Board had determined, pursuant to 

PROMESA § 108(a)(2), that HJR 235 impairs or defeats PROMESA’s purposes; and 

(iii) informing the Governor that PROMESA § 108(a)(2) bars him from signing HJR 235. On 

November 18, 2022, the Legislature sent HJR 235 to the Governor, who declined to sign the bill—

pocket-vetoing the measure.

House Bill 1429

28. House Bill 1429 (“HB 1429”), among other things, purports to require conditions 

for the restructuring of PREPA debt and the issuance of new PREPA bonds for that purpose. 

HB 1429 appears to violate PROMESA Title III and the PREPA Fiscal Plan. On November 11, 

2022, the Oversight Board sent a letter to the Governor: (i) explaining that HB 1429 violates the 

PREPA Fiscal Plan and multiple provisions of PROMESA; (ii) informing the Governor the 

Oversight Board had determined, pursuant to PROMESA § 108(a)(2), that HB 1429 impairs or 

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defeats PROMESA’s purposes; and (iii) informing the Governor that PROMESA § 108(a)(2) bars 

him from signing HB 1429. On January 9, 2023, the Legislature requested reconsideration of the 

measure and HB 1429 was sent to conference committee. The Oversight Board will undertake 

appropriate action.

III. General Status of Claims Reconciliation

29. To date, approximately 179,353 proofs of claim have been filed against the Debtors 

and logged by Kroll Restructuring Administration LLC (“Kroll”). Such proofs of claim total 

approximately $43.6 trillion in asserted claims against the Debtors, in addition to unliquidated 

amounts asserted.

30. As of the filing of this Status Report, approximately: (i) 7,439 proofs of claim 

remain asserted against the Commonwealth; (ii) 36 proofs of claim remain asserted against ERS; 

(iii) 205 proofs of claim remain asserted against PBA; and (iv) 595 proofs of claim remain asserted 

against HTA, all remaining to be reconciled (collectively, the “Remaining Claims”). 

31. Of the Remaining Claims, 2,467 are associated with three separate multi-plaintiff 

litigations. The Debtors are in the process of determining the amounts owed to each plaintiff in 

those litigations. In addition, there are over 1,500 Remaining Claims that are fully unliquidated 

and associated with other litigations (the “Fully Unliquidated Remaining Claims”). Through the 

Debtors’ ongoing claims reconciliation processes, approximately 63 Fully Unliquidated 

Remaining Claims have been subject to additional outreach efforts to agencies and opposing 

counsel; approximately 394 Fully Unliquidated Remaining Claims have been transferred into ADR 

or ACR; and, approximately 652 Fully Unliquidated Remaining Claims have been the subject of 

omnibus objections. 

32. The Remaining Claims continue to be the focus of the Debtors’ ongoing review and 

reconciliation processes, described in more detail in the subsections below. 

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ADR and ACR Processes

33. Pursuant to the Order (A) Authorizing Administrative Resolution of Claims, (B) 

Approving Additional Form of Notice, and (C) Granting Related Relief [Case No. 17-BK-03283, 

ECF No. 12274] (the “ACR Order”), the Debtors have filed twenty-seven notices transferring 

claims into Administrative Claims Reconciliation (as defined in the ACR Order), (collectively, the 

“ACR Transfer Notices”), and have transferred approximately 44,981 claims (collectively, the 

“ACR Designated Claims”), into Administrative Claims Reconciliation. The ACR Designated 

Claims will be resolved utilizing the Pension/Retiree Procedures, the Tax Refund Procedures, the 

Public Employee Procedures, and/or the Grievance Procedures (each as defined in the ACR 

Order), as set forth in the ACR Transfer Notices. Subsequent thereto, the Debtors have filed 

notices, wherein the Debtors reported the successful resolution of approximately 36,539 ACR 

Designated Claims. The Debtors’ next ACR Status Notice (as defined in the ACR Order) is 

scheduled to be filed on March 21, 2023, and the Debtors anticipate reporting the successful 

resolution of additional ACR Designated Claims.

34. With respect to certain ACR Designated Claims, mailings have been made, or are 

in the process of distribution, informing claimants that the administrative files for their claims are 

incomplete, and requesting additional information in order to enable the Debtors to reconcile their 

claims. Certain claimants have provided responses to these mailings, and the Debtors are 

evaluating the additional information received and determining whether the information received 

is sufficient to complete the claimants’ administrative file; where necessary, the Debtors will send 

further follow up mailings to such claimants to ensure they have a complete administrative file. 

The Debtors continue to await responses from numerous additional claimants. In many instances, 

the Debtors have re-sent initial mailings to claimants who failed to respond, reiterating the 

Debtors’ request for information sufficient to complete the claimants’ administrative file, and 

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warning them that ongoing failure to respond may force the Debtors to object to their claims. 

Claimants who failed to respond to the initial mailings have received a final mailing, reiterating 

the Debtors’ request for information, and informing parties that failure to respond will force the 

Debtors to object to their claims. The Debtors continue to await responses from such claimants, 

and to the extent no responses are received, the Debtors intend to object to their claims. To date, 

the Debtors have filed several objections to claimants who did not respond to the final mailings. 

35. With respect to additional ACR Designated Claims, mailings have been made, or 

are in the process of distribution, informing claimants of the initiation of the ACR process and the 

timetable for the resolution of their ACR-related claims. 

36. As of July 13, 2021, the Commonwealth, ERS, and PBA had transferred into ACR 

all outstanding claims which they understood, as of that date, were eligible for such transfer. The 

Debtors’ reconciliation of outstanding claims remains ongoing, however. To the extent the 

Commonwealth, ERS, and PBA identify additional claims eligible for ACR, they will be 

transferred into the ACR Procedures. Accordingly, on December 20, 2022, the Debtors transferred 

additional claims into the ACR Procedures. The Debtors’ next ACR Transfer Notice (as defined 

in the ACR Order) is scheduled to be filed on February 17, 2023. The Debtors may transfer 

additional claims into Administrative Claims Reconciliation on or before that date.

37. Pursuant to the Order (A) Authorizing Alternative Dispute Resolution Procedures, 

(B) Approving Additional Forms of Notice, and (C) Granting Related Relief [Case No. 17-BK03283, ECF No. 12576] (the “ADR Order”), as amended by the Order Granting Motion of the 

Financial Oversight and Management Board for Puerto Rico to Amend Alternative Dispute 

Resolution Procedures [ECF No. 23113] (the “Amended ADR Order”), the Debtors have filed 

twenty-nine notices transferring claims into the ADR Procedures (as defined in the Amended ADR 

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Order), (collectively, the “ADR Notices”), and have transferred over 1,300 claims into the ADR 

Procedures.

38. Subsequent thereto, the Debtors have filed notices, (collectively, the “ADR Status 

Notices”) indicating five (5) claims that were settled in Evaluative Mediation (as defined in the 

Amended ADR Order), twenty-four (24) claims have been fully resolved, well over one hundred 

claims are currently in the Offer-Exchange (as defined in the Amended ADR Order) phase of the 

ADR Procedures and have received either an Offer or an Information Request (as defined in the 

Amended ADR Order), and approximately twelve (12) claimants have accepted the Debtors’ 

offers. The Debtors are in the process of documenting the resolution of claims as to which offers 

have been accepted or agreements in principle have been reached.

39. The Debtors are also evaluating all responses received to Information Requests and 

Offers, and attempting to engage claimants in the hopes of achieving a consensual resolution of

the remaining claims currently in the Offer-Exchange procedures. Certain claimants have not 

responded to Information Requests or Offers, and the Debtors have already or are in the process 

of re-sending mailings to claimants who did not respond, or attempting to contact them directly 

using phone numbers or email addresses provided by the claimants. In addition, other claimants 

have responded to Information Requests, but their responses have not provided information 

sufficient to enable the Debtors to understand the nature or basis of the claim and to develop an 

appropriate Offer. To date, the Debtors have filed several objections to claimants who either did 

not respond to Information Requests or provided incomplete responses. The Debtors continue to 

await responses from additional claimants, and anticipate that they will ultimately be forced to 

object to their claims to the extent the claimants do not respond to Debtors’ outreach. 

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40. The Debtors’ next ADR Transfer Notice (as defined in the Amended ADR Order) 

is due March 10, 2023, and the Debtors anticipate transferring additional claims into the ADR 

Procedures on or before that date.

41. The Debtors’ review and analysis of the claims filed to date remains ongoing. At 

present, the Debtors continue to estimate conservatively that the maximum number of claims that 

might be transferred into the ADR Procedures is 6,000, while the actual number transferred might 

be as low as 2,000 claims. At this time, the Debtors cannot predict with certainty the timing for 

the initiation of ADR Procedures with respect to this population of claims, but anticipate additional 

accounts payable and litigation-related claims will be transferred into the ADR Procedures in the 

near term.

Objections to Claims

42. The Debtors’ claims reconciliation process remains ongoing, and the Debtors 

project they will continue to schedule omnibus and/or individual claim objections for the next 

several omnibus hearings.5

 Most recently, on January 27, 2023, the Debtors filed six omnibus 

objections covering over 101 claims. However, the Debtors continue to anticipate that, going 

forward, the number of claim objections scheduled for each omnibus hearing will be fewer in 

number, with fewer claims being included on each omnibus objection.

43. While the Commonwealth, ERS, PBA, and HTA have resolved a substantial 

number of their claims, the Debtors continue to identify claims filed at each entity that are best 

resolved via objection. For example, the Debtors anticipate continuing to file omnibus and/or 

individual objections to claims that have been subsequently amended, that assert liabilities for 

which the Debtors are not liable, that are duplicative of master claims, that have been satisfied and 

 5 Currently, approximately 67 Notices of Presentment are pending before the Court.

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released, or that assert liabilities owed by entities that are not Title III debtors, among other 

possible bases. Further, as noted above, the Debtors expect that they will be forced to object to 

claims held by claimants who have not responded to mailings sent in the ADR and ACR processes. 

44. In addition, the Debtors continue to anticipate that, while the total number of 

omnibus objections may decrease, the number of omnibus and individual claim objections filed by 

PREPA may increase. 

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Dated: January 31, 2023

San Juan, Puerto Rico

Respectfully submitted,

/s/ Martin J. Bienenstock

Martin J. Bienenstock

Brian S. Rosen

Paul V. Possinger

Ehud Barak

(Admission Pro Hac Vice)

PROSKAUER ROSE LLP

Eleven Times Square

New York, NY 10036

Tel: (212) 969-3000

Fax: (212) 969-2900

Email: mbienenstock@proskauer.com

 brosen@proskauer.com

 ppossinger@proskauer.com 

 ebarak@proskauer.com

Attorneys for the Financial Oversight and 

Management Board as representative for the 

Debtors

-and-

/s/ Hermann D. Bauer

Hermann D. Bauer

USDC No. 215205

O’NEILL & BORGES LLC

250 Muñoz Rivera Ave., Suite 800

San Juan, PR 00918-1813

Tel: (787) 764-8181

Fax: (787) 753-8944

Co-Attorneys for the Financial Oversight and 

Management Board as representative for the 

Debtors

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