Objection Deadline: February 1, 2018 at 6:00 p.m. (AST) 

UNITED STATES DISTRICT COURT

FOR THE 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

Case No. 17-BK-3283 (LTS) 

(Jointly Administered)

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In re

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

 as representative of

PUERTO RICO ELECTRIC POWER 

AUTHORITY (PREPA), 

Debtor. 

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PROMESA 

Title III

Case No. 17-BK-04780 (LTS) 

Court Filing Relates Only to PREPA

OBJECTION OF SCOTIABANK DE PUERTO RICO, AS ADMINISTRATIVE 

AGENT, TO OVERSIGHT BOARD’S URGENT MOTION TO CLARIFY THE 

SCOPE OF THE INTERIM HEARING ON THE FINANCING MOTION

 

1 The Debtors in these title III cases, along with each Debtor’s respective Title III case number listed as a 

bankruptcy case number and the last four (4) digits of each Debtor’s federal tax identification number, as applicable, 

are the (i) Commonwealth of Puerto Rico (Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax 

ID: 3481); (ii) Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) 

(Last Four Digits of Federal Tax ID: 8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) 

(Bankruptcy Case No. 17 BK 3567-LTS) (Last Four Digits of Federal Tax ID: 3808); (iv) Employees Retirement 

System of the Government of the Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-LTS) 

(Last Four Digits of Federal Tax ID: 9686); and (v) Puerto Rico Electric Power Authority (“PREPA”) (Bankruptcy 

Case No. 17 BK 4780-LTS) (Last Four Digits of Federal Tax ID: 3747).

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Scotiabank de Puerto Rico (“Scotiabank” or the “Agent”), as administrative agent 

for lenders (the “Fuel Line Lenders”) owed approximately $550 million by the Puerto Rico 

Electric Power Authority (“PREPA”) under a fuel line facility, respectfully submits this 

objection to the Urgent Motion of the Financial Oversight and Management Board for Puerto 

Rico for Entry of Order Clarifying Scope of Interim Hearing on Urgent Joint Motion of the 

Financial Oversight and Management Board for Puerto Rico, and the Puerto Rico Fiscal Agency 

and Financial Advisory Authority for Entry of Interim and Final Orders (A) Authorizing 

Postpetition Secured Financing, (B) Granting Priming Liens and Providing Superpriority 

Administrative Expense Claims, (C) Modifying the Automatic Stay, (D) Scheduling a Final 

Hearing, and (E) Granting Related Relief [Dkt. No. 557] dated January 31, 2018 (the “Scope 

Motion”).

2

1. On January 27, 2018, the Oversight Board filed the Urgent Joint Motion of the 

Financial Oversight and Management Board for Puerto Rico and the Puerto Rico Fiscal Agency 

and Financial Advisory Authority for Entry of Interim and Final Orders (A) Authorizing 

Postpetition Secured Financing, (B) Granting Priming Liens and Providing Superpriority 

Administrative Expense Claims, (C) Modifying the Automatic Stay, (D) Scheduling a Final 

Hearing, and (E) Granting Related Relief (the “Financing Motion”) [Dkt. No. 549] and 

requested an interim hearing on an expedited basis. The Financing Motion seeks authority to 

borrow up to $1.3 billion from the Commonwealth of Puerto Rico following entry of the Final 

Financing Order. Financing Mot. at 1. Of this $1.3 billion, the Financing Motion requests that 

$550 million be available for borrowing prior to the final hearing. Id.

 

2

 Capitalized terms not defined herein have the meaning ascribed to them in the Financing Motion. 

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2. Scotiabank has filed a Response and Limited Objection to the Financing Motion 

(the “Response”). The Response, while generally supporting the proposed financing, objects to 

certain aspects of the proposed Interim Financing Order. Among other things, the Response 

argues that the Oversight Board has not demonstrated that PREPA requires $550 million in 

emergency financing prior to a final hearing. 

3. The proposed order granting the Scope Motion would provide that “[t]he only 

issues to be heard at the Interim Hearing on the Postpetition Financing Motion are whether (i) the 

Debtor can obtain post-petition financing without granting a priming lien and superpriority 

claim, and (ii) any lien being primed is not adequately protected.” Scope Mot. Ex. A, at 2. 

4. But those are not the only issues that are properly before the Court at the Interim 

Hearing. At the Interim Hearing, the Court should also consider, among other things, whether 

PREPA needs all the financing it is seeking. Under Bankruptcy Rule 4001 and Local Rule 

4001-2, the Court “may authorize the obtaining of credit” prior to a final hearing “only to the 

extent necessary to avoid immediate and irreparable harm to the estate pending a final hearing.” 

Bankr. R. 4001(c)(2); P.R. LBR 4001-2(d); see also 9 Collier on Bankruptcy ¶ 4001.07[3] (Rule 

4001 “places a burden on the movant to show that no lesser means will prevent the harm that will 

ensue if the credit is not obtained”). The Financing Motion, accordingly, may be granted prior to 

a final hearing only to the extent that PREPA actually needs the relevant financing on an 

emergency basis. 

5. The Scope Motion should thus be denied, and the Court should consider all issues 

that are pertinent to the requested relief, including the amount of interim financing that may be 

required and the other issues raised in the Response. 

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Dated: February 1, 2018 Respectfully submitted,

/s/ Antonio A. Arias

Antonio A. Arias 

USDC-PR No. 204906 

aaa@mcvpr.com 

MCCONNELL VALDÉS LLC

270 Muñoz Rivera Avenue, Suite 7 

Hato Rey, Puerto Rico 00918 

P.O. Box 364225 

San Juan, PR 00936-4225 

Telephone: (787) 250-5604 

Facsimile: (787) 759-9225 

/s/ Emil A. Kleinhaus 

Richard G. Mason (admitted pro hac vice) 

Emil A. Kleinhaus (admitted pro hac vice) 

Brian Bolin (admitted pro hac vice) 

WACHTELL, LIPTON, ROSEN & KATZ

51 West 52nd Street 

New York, New York 10019 

Telephone: (212) 403-1000 

Facsimile: (212) 403-2000 

Email: rgmason@wlrk.com

 eakleinhaus@wlrk.com 

 bbolin@wlrk.com 

Attorneys for Scotiabank de Puerto Rico, as 

Administrative Agent 

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