Exhibit A

Omnibus Reply Chart

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Exhibit A Page 1 of 35
A-1

I. OBJECTIONS TO DISCLOSURE STATEMENT

Objection Argument Response

Hernández-Montañez Objection

Adequate 

Information

• The Disclosure Statement should be corrected 

to reflect the lack of a valid contract between 

PREPA and LUMA. Hernández-Montañez 

Obj. p. 3.

The Oversight Board disagrees with the assertion that the extension 

of the Supplemental Agreement is invalid. In addition, the Disclosure 

Statement is not the place to litigate this issue and the Oversight 

Board reserves all rights to address the issues if and when they come 

up. Nonetheless, the Debtor has added the following language at 

Section III.F.5 of the Disclosure Statement: 

“The Puerto Rico House of Representatives and Senate have 

asserted the extension of the Supplemental Agreement is 

invalid because, among other things, there was no approval of 

the extension by either of the public interest representative’ 

board members of the PPP Board (proposed by the legislative 

leadership or legislation). The Oversight Board disagrees 

with the Puerto Rico House of Representatives’ and Senate’s 

position.”

The Disclosure Statement already stated that Act 120 provides that 

any PREPA transactions involving the sale of assets will require 

approval by both legislative chambers. See Disclosure Statement, 

Section III.A.1. Although the Oversight Board does not believe it is 

required as “adequate information”, it nevertheless has added 

language regarding the requirement under Act 120 that the 

affirmative vote of both representatives of the public interest on the 

P3 Authority board is needed in the event that a PREPA transaction 

does not involve the sale of PREPA assets. Id. (“With regards to 

other transactions, the affirmative vote of both representatives of the 

public interest, consisting of two of the five members of the P3 

Authority’s Board, is required.”).

• The Disclosure Statement should cite statutory 

authority that outlines legislature’s authority 

to regulate public private partnerships. 

Hernández-Montañez Obj. p. 5.

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Exhibit A Page 2 of 35
A-2

Objection Argument Response

The Debtor has also added the following language in Section VIII.C 

of the Disclosure Statement:

“The Puerto Rico House of Representatives and Senate have 

also indicated that they intend to challenge the extension of 

the T&D Contract in the Title III Court. If the Interim Period 

extension is invalidated, the T&D Contract may be 

terminated. If the T&D Contract is terminated, the Plan may 

not be feasible or confirmable, or may require material 

amendment.”

• The extension of the Supplemental Agreement 

(“Extension”) is null and void because it 

required the enactment of legislation; Any 

extension of a partnership contract requires a 

mandatory assessment of efficiency and 

effectiveness, something that Puerto Rico’s 

Public-Private Partnership Authority (“P3A”) 

did not do; Once the term of a partnership 

expires, any renewal requires legislation. 

Hernández-Montañez Obj. p. 6 and p. 9. 

The Oversight Board disagrees with this legal position, and it is not 

relevant to whether the Disclosure Statement contains adequate 

information. Amendments to Public Private Partnership (“PPP”) 

agreements are regulated by Sections 10(a)(x) and 10(b)(ix) of Act 

29, providing that PPP Agreements must include provisions regarding 

the amendment and extension of such contracts, respectively. 

Accordingly, amendments or extensions of PPP Agreements are 

subject to the amendment and extension provisions set forth in such 

contracts, and not to any special statutory requirements. The general 

norm is that extensions of PPP Agreements do not require legislation. 

Legislation is required only in the event the extension will lead to a 

PPP Agreement that exceeds a 50-year term. See, Article 10(e) of Act 

29, providing, in relevant:

Term of Partnership Contract. — The term of a Partnership 

Contract executed under this Act shall be that which the 

Authority deems shall serve the best interests of the People of 

Puerto Rico, but in no case shall such term exceed fifty (50) 

years; however, upon evaluation of its merits and efficiency 

and effectiveness results, such Partnership Contracts may be 

extended for successive terms which collectively do not 

exceed twenty-five (25) additional years, as the Authority, the 

Partnering Government Entity, and the Governor or the 

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Exhibit A Page 3 of 35
A-3

Objection Argument Response

executive official on whom he/she delegates, may determine. 

Said extension must be approved by legislation.

• Act 120 provides that PREPA Transactions 

involving the sale of assets will require 

approval by both legislative chambers. 

Hernández-Montañez Obj. pp. 7-8.

A PREPA Transaction is a defined term under Section 2 of Act 120. 

It means “a transaction whereby the P3A establishes one or more 

partnerships or executes a sales contract for PREPA Generation 

assets”. The Extension here is neither because (a) it did not create a 

new public-private partnership and (ii) it did not involve the sale of a 

PREPA generation asset. Language in Section 10(b) of Act 120 (22 

LPRA 1120(b) is inapplicable as it pertains to the approval process 

for PREPA Transactions.

PV Properties Objection

Adequate 

Information 

• The Disclosure Statement does not properly 

address Puerto Rico’s public policy regarding 

energy and environmental attributes associated 

with the generation of electricity utilizing 

renewable energy as established by various 

pieces of legislation. PV Properties Obj. ¶ 3.

While the Oversight Board disagrees that creditors’ interpretations of 

Puerto Rico statutes need to be included in the Disclosure Statement 

to constitute “adequate information”, to resolve this objection it has 

nevertheless added to the Disclosure Statement the proposed 

language in paragraphs 7 and 8 of the PV Properties Objection. See

Disclosure Statement, Section III.F.6. Accordingly, the PV 

• PV Properties provides sample language to be Properties Objection is resolved.

added to the Disclosure Statement. PV 

Properties Obj. ¶ 7-10.

SREAEE Objection 

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Exhibit A Page 4 of 35
A-4

Objection Argument Response

Adequate 

Information

• Disclosure Statement does not include 

sufficient information as to how it is going to 

fund the PREPA PayGo Trust, including how 

it is going to fund its initial 1-million-dollar 

deposit, or the adequacy of the deposit 

amount. SREAEE Obj. ¶ 7.

The Plan has been clarified to indicate that PREPA will fund the 

initial deposit to the PREPA PayGo Trust. See Disclosure Statement, 

Section VI.M. The Plan provides that Reorganized PREPA shall pay 

to the PREPA PayGo Trust the amounts required to reimburse 

PREPA ERS for retirement benefits paid and reasonable 

administrative costs incurred by PREPA ERS. Plan Article VI. 

These payments are to be made to the PREPA PayGo Trust as an 

Operating Expense. Plan Article XIX.G (explaining Operating 

Expenses are paid before debt service); Article I.166 (explaining 

“Operating Expenses” include payments to the PREPA PayGo Trust). 

The Oversight Board will demonstrate at confirmation that the Plan is 

feasible, and that Reorganized PREPA will be able to make the 

payments necessary to satisfy its Plan obligations to the PREPA 

PayGo Trust. 

• There is no analysis concerning the decision to 

subordinate Trust payments to Series B 

Bonds, and general unsecured creditors

SREAEE Obj. ¶ 8.

The PREPA PayGo Trust is not subordinate to the Series B Bonds. 

As explained above, the Plan provides that payments to the PREPA 

PayGo Trust are paid out of Operating Expenses, which are paid 

before Net Revenues are applied to payment of New Bonds. The 

PREPA PayGo Trust may also receive additional Series B Bonds; if 

so, payments on such bonds would decrease amounts necessary for 

Reorganized PREPA to pay to the PREPA PayGo Trust from 

Operating Expenses.

• There is no financial analysis in the Disclosure 

Statement proving what will be accomplished 

as a result of pension freeze or the CBA 

savings. SREAEE Obj. ¶ 9.

The Debtor has added (i) a description to the Disclosure Statement 

summarizing the relative costs to PREPA with and without the Plan’s 

pension reform measures and (ii) Exhibit Q to the Disclosure 

Statement, which provides an estimate of savings that would result 

from proposed modifications to the CBAs (in the absence of the 

transition to Genco).

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Exhibit A Page 5 of 35
A-5

Objection Argument Response

UTIER Objection 

Adequate 

Information

• The Disclosure Statement does not provide 

information regarding the effects of a rejected 

CBA. UTIER Obj. ¶ 9.

Exhibit Q to the Disclosure Statement provides an estimate of savings 

that would result from proposed modifications to the CBAs. The 

Disclosure Statement also describes savings to be achieved from the 

freeze of the pension system and the magnitude of CBA grievance 

claims asserted by UTIER that would need to be paid in full were the 

CBA to be assumed. 

The Debtor has also added the following language in Section III.B.5 

of the Disclosure Statement:

• “The number of Represented Employees is likely to 

substantially decrease following the transition of the 

operation and management of PREPA’s legacy generation 

assets to Genera PR.”

Because PREPA will have very few, if any, remaining union 

employees following the transition of operation of its Generations 

Assets to Genera PR, the non-pension and non-grievance savings 

from modifications to CBAs will be minimal. 

• The Disclosure Statement provides no 

information regarding the agreements with 

Genera PR LLC or Luma Energy LLC. 

UTIER Obj. ¶ 10-11.

The Genera PR agreement was not in effect at the time the Disclosure 

Statement was filed. The Debtor has since added a summary of the 

operation and maintenance agreement for the private operation of 

PREPA’s legacy generation assets by Genera PR to Section III.F.5.ii 

of the Disclosure Statement. The Disclosure Statement already 

included a comprehensive description of the T&D Contract with 

LUMA, including at Sections I.C. and III.F.5.i. 

Feasibility • The Disclosure Statement does not adequately 

explain how PR will generate sufficient 

demand to support electric system operations. 

Specifically, the “Debt Sustainability 

Analysis” does not show that ongoing debt 

The projected revenues under the Plan are based on the 2022 

Certified Fiscal Plan and are projected to cover operating expenses. 

PROMESA provides the Oversight Board with ultimate authority 

regarding the contents of the Fiscal Plan, and with certain powers to 

ensure PREPA’s compliance with the Certified Fiscal Plan. See, e.g., 

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Exhibit A Page 6 of 35
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Objection Argument Response

service would be feasible. UTIER Obj. ¶ 12-

13.

PROMESA §§ 201, 204. The feasibility of the Plan, including the 

sustainability of the debt and the Legacy Charge, will be 

demonstrated at confirmation. Notably, bondholders have argued the 

demand projections in the Certified Fiscal Plan are too low and too

conservative. This stands in contrast to UTIER, who calls into doubt 

the feasibility of the Plan based on asserted “onerous Legacy 

Charges.” 

• The Disclosure Statement does not address the 

issues described in the Kobre & Kim Report 

(mismanagement, political opportunism, 

improper oversight, ect.) Obj. ¶ 17

The Disclosure Statement includes an extensive summary of Kobre & 

Kim LLP’s investigation and eventual report, as well as the positive 

steps taken by the Oversight Board in response to the 

report. Disclosure Statement, Section V.I.1.

Joy Objection

Adequate 

Information 

• The Disclosure Statement does not provide 

information regarding if Class 9 (Eminent 

Domain) Claims will be allowed to vote, or 

their expected recovery amount. Joy Obj. ¶ 2.

The Disclosure Statement has been updated to reflect an estimated 

$2.4 million in eminent domain claims. See Disclosure Statement 

Section VI.E. Holders of Clams in Class 11 shall be entitled to vote 

on the Plan. Their recovery will be equal to the recovery for General 

Unsecured Claims if the Oversight Board prevails in its appeal that 

takings claims can be discharged in a title III plan of adjustment. If 

the Oversight Board does not prevail, Eminent Domain/Inverse 

Condemnation claims will receive a 100% cash recovery.

Whitefish Objection 

Adequate 

Information 

• The Disclosure Statement should include the 

“Finance Charge Administrative Claim” (the 

Objector’s claim) in its discussions of 

administrative claims. Whitefish Obj. ¶ 4.

The Oversight Board has included language in the Disclosure 

Statement clarifying Whitefish’s administrative expense claim, and 

therefore satisfying its objection to the Disclosure Statement. See 

Disclosure Statement, Section V.D.6. 

UCC Objection

Adequate 

Information

• The Disclosure Statement is too complicated 

and contains too many contingencies. UCC 

Obj. ¶ 38.

As explained in Section II.A of the Reply, the Plan, despite providing 

for various litigation outcomes, is not prohibitively complex, and the 

Disclosure Statement adequately and in several different ways 

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Exhibit A Page 7 of 35
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Objection Argument Response

explains how different litigation outcomes affect different creditor 

recoveries. The Disclosure Statement includes numerous plain 

language explanations of creditors’ treatment under the Plan and the 

distribution waterfall. See Disclosure Statement, Section I.A, II.B, 

II.B.(iv)(4)-(6). It also includes illustrative recovery tables, and an 

illustrative chart was added to further graphically demonstrate the 

distribution waterfall. See Disclosure Statement, Section II.B(iv)(6). 

The UCC itself provided a succinct and plain language summary of 

the Plan’s distributions in its own Objection (UCC Obj. ¶ 38), 

demonstrating the Plan is intelligible. 

• The Disclosure Statement does not adequately 

describe creditor recoveries for general 

unsecured creditors. UCC Obj. ¶ 46.

As explained above and in Section II.A of the Reply, the Disclosure 

Statement adequately describes general unsecured creditor recoveries 

in plain language and graphically, and how the various litigation 

outcomes impact creditor recoveries. See Disclosure Statement, 

Section II.B, VI.C.2.

• The Disclosure Statement fails to adequately 

explain the basis for its estimate of the size of 

the total claims in Class 5. UCC Obj. ¶¶ 50-

54. 

The Disclosure Statement has been updated to explain the Oversight 

Board’s estimation of the General Unsecured Claims Pool. See

Disclosure Statement, Ex. O.

• The Plan excludes eminent domain/inverse 

condemnation claims from the Unsecured 

Claims Pool Estimate. UCC Obj. ¶ 50 n.32. 

The Oversight Board has amended the plan to provide that, unless, by 

the Effective Date of the Plan, the Oversight Board has lost its appeal 

that takings claims can be discharged in a Title III plan of adjustment, 

the amount of such claims will be added to the Unsecured Claims 

Pool Estimate. See Disclosure Statement, Section VI.C. 

• The Disclosure Statement lacks adequate 

information regarding which PREPA claims 

will be transferred to ACR. UCC Obj. ¶ 55. 

While the ACR procedures apply to PREPA, the Oversight Board has 

no intention of transferring any claims to ACR at this time. However, 

the Oversight Board expressly reserves the right to move claims to 

ACR should the Oversight Board deem it appropriate in the future.

• The Disclosure Statement does not provide 

adequate disclosure with respect to the 

Avoidance Action Trust. UCC Obj. ¶ 57.

The Oversight Board will disclose in a plan supplement whether 

certain avoidance actions, including what the UCC refers to as the 

“Fuel Oil Litigation”, and/or their proceeds will be added to the 

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Exhibit A Page 8 of 35
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Objection Argument Response

Avoidance Action Trust. If the Oversight Board determines to 

transfer such actions or their proceeds to the Avoidance Actions 

Trust, it would only serve to enhance GUC recoveries. These 

avoidance actions are described in Part V on the Disclosure 

Statement. While the Oversight Board will not undertake to value 

these actions (which would likely involve some estimation of the 

probability of success), the amount PREPA is seeking to avoid can be 

determined by reference to the complaint themselves. 

• The Disclosure Statement does not describe 

the full treatment afforded to the Fuel Line 

Lenders. UCC Obj. ¶ ¶ 61-67.

The Disclosure Statement describes the full treatment of Fuel Line 

Lenders’ claims in numerous places. See, e.g. Disclosure Statement, 

Sections II.B(1), (4) and (6). The Disclosure Statement also discusses 

that the Fuel Line Lenders will receive certain professional 

reimbursement fees and consummation costs, which sums are not on 

account of their claims. Id. It further makes clear that the calculation 

of the recovery on their claims does not include these sums. Id. The 

UCC’s objection is that these fees are not calculated as a recovery on 

account of the Fuel Line Lenders’ claims, and not that these amounts 

were not disclosed (which they repeatedly are). As in both the 

Commonwealth and HTA disclosure statements, [ECF No. 17628 in 

Case No. 17-3283]; [ECF No. 21269 in Case No. 17-3283], 

professional fees and consummation costs are not accounted for in the 

calculation of a claimholder’s recovery on their Allowed Claim, and 

are instead listed separately. See Disclosure Statement, Section II.B.4 

and VI.E, Ex. M. The UCC provides no reason to divert from this 

Court-approved practice here. 

• The Disclosure Statement does not adequately 

describe PREPA ERS’s “Current Expense” 

claim and the potential affect the outcome of 

the underlying litigation will have on 

PREPA’s restructuring. UCC Obj. ¶¶ 70-71.

The Disclosure Statement identifies both the asserted size of PREPA 

ERS’s claim, and the alleged sources of such liabilities. Disclosure 

Statement, Section III.B.6(ii). In addition, the Disclosure Statement 

clearly explains “[r]egardless of the outcome of [the Current 

Expense] litigation, the Plan’s treatment of the PREPA ERS claim 

provides that payments by PREPA to fund pensions, as adjusted by 

the Plan, shall be treated as Operating Expenses.” Id. Finally, and as 

cited by the Committee, the Disclosure Statement recognizes a 

potential need to amend the Plan should PREPA ERS prevail in its 

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Exhibit A Page 9 of 35
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Objection Argument Response

“Current Expenses” claim. Id. Section II.B.4(i). There is no basis for 

the Oversight Board to speculate the likelihood of how the Court 

might rule on PREPA ERS’s claim for priority.

• The Disclosure Statement does not provide 

adequate information regarding the terms of 

key settlements. UCC Obj. ¶ 74.

The Disclosure Statement thoroughly discloses the issues in the 

Current Expense Adversary Proceedings with the Fuel Line Lenders 

and the terms of the Fuel Line Lender PSA settling the claims of the 

Fuel Line Lenders against PREPA. See, e.g., Disclosure Statement, 

Sections I.A, I.C, II.B.1, III.B.2, and V.C.3. Now that the National 

PSA has been executed, the Plan has been amended and the 

Disclosure Statement thoroughly discloses the terms of the settlement 

with National and explains why such terms are reasonable. See, e.g., 

Disclosure Statement, Sections I.A, II.B(2), II.B(7), VI.C(1)-(2), and 

VI.D(4). The reasonableness of the settlements and their consistency 

with confirmation requirements will be demonstrated at the 

confirmation hearing.

• The Disclosure Statement does not provide 

adequate disclosure regarding feasibility, the 

Legacy Charge and possibility of fully secured 

bondholders UCC Obj. ¶¶ 80-85.

As explained above, the projected revenues under the Plan are based 

on the 2022 Certified Fiscal Plan. PROMESA provides the Oversight 

Board with ultimate authority over the contents of the fiscal plan and 

with certain powers to ensure PREPA’s compliance with the Certified 

Fiscal Plan. The feasibility of the Plan, including the Legacy Charge,

will be demonstrated at confirmation. The 2022 Certified Fiscal Plan 

provides for a rate sufficient to pay operating expenses of PREPA, 

and the Legacy Charge provides sufficient revenue to pay the debt 

issued under the Amended Plan. The Disclosure Statement also 

explains as risk factor that if the Non-Settling Bondholders prevail on 

the Lien and Recourse Counts and are determined to be fully secured 

by all of PREPA’s future revenues, then no restructuring of PREPA 

may be possible. See Part VIII.A.

• The Disclosure Statement does not provide 

adequate disclosure regarding the value and 

availability of PREPA’s assets. UCC Obj. ¶¶ 

87-90.

The Committee’s argument is based on the incorrect contention that 

government assets must be identified for liquidation to “maximize 

creditor recoveries.” This theory is thoroughly rebutted in the Reply 

Section I.C. PREPA requires its physical assets to operate and 

provide an essential service and they are not available for distribution 

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Exhibit A Page 10 of 35
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Objection Argument Response

to creditors. Unlike a chapter 11 bankruptcy, a municipality’s 

physical assets are not valued or used for distributions to creditors, as 

they are necessary for the entity to keep operating. The Supreme 

Court in Faitoute Iron & Steel Co. v. City of Asbury Park, 316 U.S. 

502, 509–10 (1942) foreclosed this argument when it ruled that 

creditors were not entitled to the value of assets owned by municipal 

debtors. Id. at 509 (“An unsecured municipal security is therefore 

merely a draft on the good faith of a municipality in exercising its 

taxing power. The notion that a city has unlimited taxing power is, of 

course, an illusion. A city cannot be taken over and operated for the 

benefit of its creditors, nor can its creditors take over the taxing 

power.”).

• The Disclosure Statement fails to adequately 

address the potential outcome of the Cobra 

Admin Motion and does not include any 

substantive discussion of the Cobra Admin 

Motion. UCC Obj. ¶ 91.

Detailed discussion of the Cobra Admin Motion is contained in 

Section VI.D.7 of the Disclosure Statement. In particular, Section 

VI.D.7 has been amended to reflect updates regarding the amounts 

expected to be obtained from FEMA. The Disclosure Statement has 

been revised to remove the concept of the “Claim Reserve Fund”.

Whether sufficient funds are available to satisfy administrative 

expenses is a factual issue regarding feasibility—an issue to be 

determined at confirmation. The Legacy Charge takes into account 

the need to fund the Series B-2 bonds that will be issued to finance 

the Admin Expense Claim. 

• Neither the Disclosure Statement nor Plan 

define the term “Claim Reserve Fund” and, in 

fact, that term appears nowhere else in either 

document. Id.

• Plan contemplates that PREPA will generate 

only $400 million through the sale of the 

Administrative Expense Bonds. This calls into 

question PREPA’s ability to pay its 

administrative expenses (and, therefore, to 

confirm any plan) if Cobra prevails on the 

Cobra Admin Motion. Id.

Patently 

Unconfirmable 

• The Disclosure Statement cannot be 

confirmed because the Plan is patently 

unconfirmable and unfairly discriminatory. 

UCC Obj. ¶¶ 94-103.

This argument is addressed in detail in the Reply. See Reply Sections 

I.A and B.1.

As a preliminary matter, however, this is yet another confirmation 

issue that the UCC is attempting to raise as an objection to the 

Disclosure Statement. Even the authority the UCC cites when 

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Exhibit A Page 11 of 35
A-11

Objection Argument Response

describing the legal standard for what constitutes unfair 

discrimination is taken from a Third Circuit opinion discussing a 

senior noteholder’s appeal to a plan confirmation rather than a 

disclosure statement objection. See In re Trib. Co. 972 F.3d 228, 236-

37 (3d. Cir. 2020). 

The same is true with the authority the UCC relies on when arguing 

the risk associated with the Oversight Board’s claim classification is 

unfair discrimination. See In re DeLeo, 2022 WL 1072857, at *1 

(Bankr. D. Me. Apr. 8, 2022) (“Following approval of a related 

disclosure statement, the debtor solicited votes on the Plan.”) 

• The UCC asserts the Oversight Board 

concedes in the Best Interest Test report that 

many general unsecured claims are current 

expense claims and thus must receive priority 

commensurate with the Fuel Line Lenders or 

else constitute unfair discrimination. UCC 

Obj. ¶ 97. 

The referenced header in the Best Interest Test report was for 

descriptive purposes only and is not a concession that any prepetition 

expenses were current expenses. For the avoidance of doubt, any 

amended report will update such header to clarify the claims it covers 

are simply prepetition unsecured claims.

PREPA does not believe any general unsecured creditors can assert 

Current Expense priority. The claims are not like the Fuel Line 

Lenders, whose agreements with PREPA provided they would be 

treated as Current Expenses under the Trust Agreement and whose 

claims are expressly referred to in the Trust Agreement. The Trust 

Agreement provides that there are no third-party beneficiaries, and 

the Puerto Rico Court of First Instance has already determined that 

the purported priority waterfall cannot be enforced by third 

parties. UTIER, et al. v. Autoridad de Energia Electrica de Puerto 

Rico, et al., Case No. K-AC2016-0291 at 72-73 (Dec. 19, 2016). 

Moreover, PREPA has discretion to determine which expenses 

constitute Current Expenses, and only those expenses that PREPA 

budgeted as Current Expenses in the appropriate fiscal year could 

assert such a claim. See Trust Agreement section 505 (making clear 

PREPA is only authorized to “first pay” Current Expenses that “will 

not exceed the amount provided therefor in the Annual Budget for 

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Exhibit A Page 12 of 35
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Objection Argument Response

such fiscal year . . . .”). Unbudgeted expenses, even if they meet the 

definition of “Current Expenses,” are not subject to section 505.

In any case, the Oversight Board will demonstrate at confirmation 

that there is no unfair discrimination with respect to the treatment of 

the Fuel Line Lenders and the General Unsecured Claims.

Voting 

Procedures

• Any creditor that has or will receive a request 

for estimation should be entitled to vote on the 

Plan and receive a Solicitation Package to the 

extent that such claim is not contingent or 

unliquidated. Reference of “a request for 

estimation” is “an impossibly vague 

statement.” UCC Obj. ¶ 105.

Section 502(c) of the Bankruptcy Code clearly provides for the 

estimation of claims. Allowing claimants subject to a request for 

estimation to vote on the Plan at the full amount of their asserted 

claim would prejudice other creditors if the claim is ultimately 

estimated at a lower amount. Claimants subject to a request for 

estimation are not without recourse, however. The proposed 

procedures provide a process for such holders to seek allowance of 

their claim for voting purposes pursuant to Bankruptcy Rule 3018(a). 

Furthermore, the proposed voting procedures are consistent with the 

voting procedures the Court approved in connection with the 

solicitation of the plans of adjustment for COFINA, the 

Commonwealth, and HTA. See 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 and Election Procedures, 

(VI) Approving Notice of Non-Voting Status, (VII) Fixing Voting, 

Election, and Confirmation Deadlines, and (VIII) Approving Vote 

Tabulation Procedures [Case No. 17-3284, ECF No. 375] (“COFINA 

DS Order”) ¶ 26(h); 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 and Election Procedures, (VI) Approving Notice 

of Non-voting Status, (VII) Fixing Voting, Election, and Confirmation 

Deadlines, and (VIII) Approving Vote Tabulation Procedures [Case 

No. 17-3283, ECF No. 17639] (“Commonwealth DS Order”) ¶ 26(i); 

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Exhibit A Page 13 of 35
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Objection Argument Response

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 and Election 

Procedures, (VI) Approving Notice of Non-voting Status, (VII) Fixing 

Voting, Election, and Confirmation Deadlines, and (VIII) Approving 

Vote Tabulation Procedures [Case No. 17-3567, ECF No. 1248] 

(“HTA DS Order”) ¶ 37(h).

Service • The Debtor should serve on the parties entitled 

to receive the Solicitation Package a paper 

summary of the Plan (in English and in 

Spanish), including a hard copy of the UCC’s 

recommendation letter and instructions for 

how and where creditors can obtain and 

review hard copies of all the Disclosure 

Statement and Plan. UCC Obj. at ¶¶ 106–107.

The UCC fails to explain what the paper summary of the Plan should 

include, or provide a form of proposed paper summary. Nonetheless, 

the Oversight Board proposes to include in the Solicitation Package 

to holders of claims in Class 7 (General Unsecured Claims) a paper 

copy of Section II.B of the Disclosure Statement (Summary of Key 

Components of the Plan of Adjustment); provided, however, that such 

paper copy shall be deemed to be subject to all disclaimers and 

provisions of the Disclosure Statement. The UCC’s failure to 

specify the contents, or provide a proposed form, of such paper 

summary should not allow it to delay the approval of the proposed 

solicitation procedures and commencement of solicitation to finalize 

the contents of the paper summary.

The proposed procedures already provide that copies of the 

Disclosure Statement and Plan will be available at the various onisland ballot collection sites. 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 and Election Procedures, 

(VI) Approving Notice of Non-voting Status, (VII) Fixing Voting, 

Election, and Confirmation Deadlines, and (VIII) Approving Vote 

Tabulation Procedures (the “Proposed PREPA DS Order”) ¶ 35. 

The Oversight Board does not object in principle to inclusion of a 

letter from the UCC in the Solicitation Package but reserves the right 

• The Debtors should establish certain “centers” 

where such hard copies will be available. UCC 

Obj. at ¶ 107.

• The Solicitation Package should include a 

letter from the UCC setting forth the UCC’s 

recommendation to holders of General 

Unsecured Claims in Class 5 with respect to 

whether to vote to accept or reject the Plan. 

UCC Obj. at ¶¶ 108–109.

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Exhibit A Page 14 of 35
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Objection Argument Response

to object to the content of such letter. The UCC should provide a 

proposed form of UCC letter well in advance of the Disclosure 

Statement Hearing to allow the Oversight Board to review such letter. 

Subject to any objection to the proposed letter, the UCC should be 

required to provide the Oversight Board with a finalized English and 

Spanish version of the letter no later than two (2) business days after 

entry of the Proposed PREPA DS Order. The Oversight Board 

reserves the right not to include materials with its solicitation package 

that advocate against the Amended Plan.

Depository • The Debtor should be required to prepare a 

privilege log in connection with the 

Depository. UCC Obj. at ¶ 111.

• The UCC objects to the Objection/Discovery 

Procedures proposed by the Oversight Board. 

UCC Obj. ¶ 110. 

The proposed Depository procedures are consistent with those 

approved in connection with the plans of adjustment for the 

Commonwealth and HTA. See Order Establishing Procedures and 

Deadlines Concerning Objections to Confirmation and Discovery in 

Connection Therewith [Case No. 17-3283, ECF No. 17640] (the 

“Commonwealth Conf. Proc. Order”); Order Establishing, Among 

Other Things, Procedures and Deadlines Concerning Objections to 

Confirmation and Discovery in Connection Therewith [Case No. 17-

3567, ECF No. 1249] (the “HTA Conf. Proc. Order”).

As in the Commonwealth and HTA’s confirmation proceedings, a 

privilege log is unnecessary and unworkable. The purpose of the 

Depository is to make available the “Debtor’s relevant non-privileged

documents relied upon by the Debtor in analyzing its assets and the 

various claims asserted against it,” and “Debtor’s relevant nonprivileged documents concerning the Best Interests Test Report set 

forth in the Disclosure Statement.” Motion of Puerto Rico Electric 

Power Authority for Order Establishing, Among Other Things, 

Procedures and Deadlines Concerning Objections to Confirmation 

and Discovery in Connection Therewith [Case No. 17-4780, ECF No. 

3114] (the “Conf. Proc. Mot.”) ¶ 36 (emphasis added). Given the 

scope of the Debtor’s review of documents in connection with 

populating the Depository, a privilege log is unnecessary. 

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Objection Argument Response

Notwithstanding the above, the Debtor is willing to revisit whether 

the creation of a privilege log is appropriate in light of any 

forthcoming production requests.

Discovery 

Notice

• Parties in interest who wish to participate in 

discovery should not be required to file a 

Discovery Notice. UCC Obj. at ¶¶ 112–113.

• The deadlines for filing a Discovery Notice 

will prevent parties in interest from 

participating in discovery because parties in 

interest won’t have sufficient time to (i) 

review the Disclosure Statement, (ii) 

determine whether to file a Discovery Notice, 

and (iii) prepare and file a Discovery Notice. 

UCC Obj. at ¶ 113.

The proposed Discovery Notice is consistent with the notice approved 

in connection with the plans of adjustment for the Commonwealth. 

See Commonwealth Conf. Proc. Order ¶ 3. Importantly, the 

Discovery Notice gives the Oversight Board fair notice of the parties 

seeking to take discovery, which will allow it to include them in 

relevant communications, if necessary, to minimize duplicative 

efforts.

Notice of the deadline to file the proposed Discovery Notice is 

included in the Confirmation Hearing Notice, which will be mailed 

on or before five (5) business days after entry of the Proposed 

PREPA DS Order, or as soon as reasonably practicable thereafter—

well before the initial March 29, 2023 deadline to submit such notice 

for purposes of participating in discovery. Proposed PREPA DS 

Order, Schedule 2 ¶¶ 8–10. 

Parties in interest do not need to review the Disclosure Statement 

before filing a Discovery Notice. Parties in interest may file a 

Discovery Notice to reserve their rights to participate in discovery, 

but they are not obligated to participate in discovery if, after 

reviewing the Disclosure Statement, they determine discovery is not 

necessary. 

Filing a Discovery Notice is a low burden for parties in interest. A 

form of a Discovery Notice will be available at 

https://cases.ra.kroll.com/puertorico/ and it will only require minimal 

biographical information, including the party’s name, address, nature 

of their Claim, and Claim number. Indeed, as the Court is well 

aware, hundreds of creditors had no difficulty preparing and filing 

Discovery Notices in connection with the Commonwealth’s 

confirmation proceedings.

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Exhibit A Page 16 of 35
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Objection Argument Response

Ad Hoc Group Objection 

Patently 

Unconfirmable

• The Plan is patently unconfirmable and 

proposed in bad faith. AHG Obj. ¶ 20-24.

This is addressed in detail in the Reply. See Reply Section I.D.

• The Oversight Board has abused the mediation 

process. AHG Obj. ¶ 28.

This is addressed in detail in the Reply. See Reply Section I.D.ii.

• The Oversight Board defied the Court’s order 

to file a Plan confirmable regardless of the 

outcome of litigation. AHG Obj. ¶ 33.

This is addressed in detail in the Reply. See Reply Section II.A.

• The Plan does not satisfy the best interest of 

the creditors. AHG Obj. ¶ 37.

This is addressed in detail in the Reply. See Reply Section I.C.

• The Plan is infeasible because the Series B 

Bonds may not be paid. AHG Obj. ¶¶ 44–45. 

If the Plan is not feasible, it will not be confirmed. This is addressed 

in detail in the Reply. See Reply Section I.E. PREPA’s regulator 

(PREB) is required to exercise its power over rates to ensure PREPA 

recovers all operational and maintenance costs (Act 57-2014 § 

6.25(b)) and meets its obligations to bondholders (Act 17-2019 § 

6.3(p)). Nevertheless, the Plan has been amended to provide an 

interest rate covenant for the benefit of the Series B Bonds. 

Moreover, the New Bonds do not default if they are not fully 

defeased by their maturity date, so failure to pay them in full by their

expected repayment date does not render the plan infeasible. The 

Legacy Charge will continue to generate revenues until the Series B 

Bonds are paid in full (including interest that accrued prior to the 

final maturity date).

• The Plan will lack any valid impaired 

accepting class. AHG Obj. ¶ 46.

This is addressed in detail in the Reply. See Reply Section I.A. The 

Oversight Board believes the Plan is supported by numerous impaired 

accepting classes. Nevertheless, until voting has been completed, we 

cannot ascertain which classes will accept and whether, in the Ad 

Hoc Group’s estimation, they constitute a valid impaired accepting 

class. Therefore this issue cannot render the plan patently 

unconfirmable because the record requires further development. 

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Exhibit A Page 17 of 35
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Objection Argument Response

• The settlement offer to uninsured bondholders 

exposes post-reorganization PREPA to 

liability under the securities laws. AHG Obj. 

¶¶ 62 – 63.

The Ad Hoc Group’s hypothetical contention is irrelevant to the issue 

before the Court, which is whether the Disclosure Statement contains 

adequate

information. The settlement offer, which is not an offer for a sale of 

securities, but provides bondholders the opportunity to choose which 

class to vote in on a plan after and after a disclosure statement has 

been approved, does not violate any securities laws. Nor does it 

require them to vote affirmatively on such a plan. As such, PREPA 

will not face any liability as a result of such settlement offer.

In any event, even if any liability were to arise, such liability would 

not burden any reorganized PREPA for at least two reasons: (1) the 

Amended Plan, Article XXVII.D contains the customary express 

exculpation of PREPA from liability for actions taken in connection 

with its restructuring, including with respect to the bondholder 

settlement offers, and (2) any liability would arise pre-confirmation 

and thus would be discharged by the Plan, under Bankruptcy Code § 

944(b), and all parties would be precluded from bringing actions 

against PREPA with respect to the settlement offer and all other 

claims arising against PREPA prior to the Effective Date. See Plan 

Article XXVII.A. The Ad Hoc Group’s citation to Jacobson v. AEG 

Cap. Corp., 50 F.3d 1493, 1496 (9th Cir. 1995) is inapposite. In that 

case, shareholders of a bankrupt company that had emerged from 

bankruptcy filed a complaint in federal court alleging that other 

shareholders—not the bankrupt company—had committed securities 

law fraud. Id. at 1495. Therefore, Jacobsen does not support the Ad 

Hoc Group’s contention that a securities law violation could saddle a 

debtor with post-effective date liability.

Furthermore, Bankruptcy Code section 944(b) incorporated into 

PREPA’s Title III case by PROMESA section 301 provides that the 

debtor is discharged from all debt as of confirmation. Subsection (c) 

lists only two kinds of debt not discharged by a confirmation order: 

(i) those debts “excepted from discharge by the plan or order 

confirming the plan”; and (ii) those debts “owed to an entity that, 

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Objection Argument Response

before confirmation of the plan, had neither notice nor actual 

knowledge of the case.” Any securities law liability would fit neither 

of these narrow exceptions to discharge.

• The Plan cannot satisfy the cramdown 

requirements. AHG Obj. ¶ 65.

The cramdown requirement is an issue for confirmation that requires 

factual development. As addressed in detail in the Reply, this issue 

cannot render the Plan patently unconfirmable. See Reply Section 

I.C.

Adequate 

Information 

• The Disclosure Statement does not provide 

adequate information about the Oversight 

Board’s analysis to support its assertion that 

PREPA can affordably and sustainably pay 

Bondholders only around $4 billion, why it 

cannot afford to pay CVI holders for longer 

than 35 years, or why it has changed positions 

on affordability. AHG Obj. ¶ 79-80.

Bankruptcy Code section 1125 provides a disclosure statement need 

not describe alternate plans. For the reasons stated in Section II.C of 

the Reply, there is no affordability test under PROMESA, and it is 

not part of the requirements for confirmation. That said, 

circumstances have changed over the years since PREPA has been in 

Title III as well as changes to apparent risks. The Oversight Board 

has determined not to incur obligations greater than 35 years to the 

extent avoidable because, among other things, PREPA will have to 

engage in significant capital improvements and replacements just to 

keep functioning. The vast majority of municipal revenue bonds have 

maturities of 35 years or less, and such maturity is appropriate in this 

case. Moreover, PREPA’s revenue bonds contained a 30 year 

maturity themselves. 

The additional revenues available for the payment of debt has been 

the basis for the $5.68 billion of New Bonds, as described in Part 

II.B.3.iii of the Disclosure Statement. Furthermore, a derivation of 

the how the Oversight Board determined the amount of the Legacy 

Charge is set forth in Exhibit P to the Disclosure Statement.

• The Disclosure Statement does not adequately 

explain the nature and structure of the Legacy 

Charge that will fund the debt service 

payment. AHG Obj. ¶ 81-82.

A derivation of the Legacy Charge that the Oversight Board has 

determined is affordable and sustainable is set forth in Exhibit P to 

the Disclosure Statement.

A description of the rates applicable to the various customer classes 

and exemptions is provided in Section II.B.3.iii of the Disclosure 

Statement and schedule B of the Plan.

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Exhibit A Page 19 of 35
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Objection Argument Response

• The Disclosure Statement must disclose the 

specifics of the Series B Bonds’ off-market 

terms and must clarify the lien granted for the 

benefit of Series B Bonds. AHG Obj. ¶¶ 83–

87.

The Plan has been amended to provide an interest rate covenant for 

the benefit of the Series B Bonds, and other improved terms for 

Series B Bonds resulting from the Oversight Board’s settlement with 

National. The Oversight Board has also adopted some of the Ad Hoc 

Group’s proposed language regarding their contention on market 

terms. See, e.g., Disclosure Statement Sections I.B., VIII.E, VIII.F.

• The Disclosure Statement does not adequately 

disclose risks related to the Amended Lien & 

Recourse Litigation and the Fuel Line Lender 

Priority Action. AHG Obj. ¶¶ 89-90.

Contrary to the Ad Hoc Group’s assertions otherwise, the Disclosure 

Statement describes the risks and potential variations in creditor 

recovery based on the outcome of both the Amended Lien & 

Recourse Challenge and the Fuel Line Lender Priority Action 

multiple times throughout the document. See Disclosure Statement, 

Sections I.A, II.B, II.B.4, VI.C.2.

• The Disclosure Statement does not adequately 

disclose the possibility that bondholders will 

be restricted from trading their bonds until the 

Effective Date. AHG Obj. ¶ 91.

The Debtor has revised the Proposed PREPA DS Order to remove the 

provision that the Debtor, in coordination with DTC, may determine 

that the bonds tendered through ATOP must be restricted from 

transferring or trading until the Effective Date. Accordingly, such 

risk factor is no longer necessary. However, holders of PREPA 

Revenue Bonds insured by National who make a distribution election 

will be restricted from trading until the Effective Date. Proposed 

PREPA DS Order ¶ 37. 

• Fifth part of the Disclosure Statement is 

inadequate; effect of delays on distributions 

AHG Obj. ¶ 91.

The Debtor has added the following language in Section VIII.A of the 

Disclosure Statement:

• “The Effective Date may be significantly delayed or not 

occur.

• The Effective Date may be significantly delayed due to 

pending litigation, including, without limitation, the 

Amended Lien & Recourse Challenge. The Effective Date 

may not occur until the Amended Lien & Recourse Challenge 

is resolved, which could take years.”

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Objection Argument Response

Current 

Expense 

Litigation

• The Current Expense Litigation “must be 

resolved,” and the Ad Hoc Group “intends to 

move to lift the stay on this litigation and seek 

judgment on an expedited basis that the Fuel 

Line Lenders’ subordination and priority 

claims against Bondholders are meritless.” 

AHG Obj. at ¶ 94.

The Court has already declined to consider the Current Expense 

Litigation because, in its current posture, the parties’ arguments are 

premised upon the Government Parties’ motion to approve the nowterminated 2019 RSA. The Ad Hoc Group offers no basis to 

reconsider this determination. 

In any event, the Ad Hoc Group’s request to litigate the Fuel Line 

Lenders’ priority is a naked attempt to continue litigating an issue that 

the Fuel Line Lenders and the Oversight Board seek to settle through 

the Plan. See Reply Section I.B.2. The PSA with the Fuel Line 

Lenders settles the priority claim against PREPA, and once the Plan 

is confirmed the litigation will become moot. However, Bondholders

can object to the treatment of the Fuel line Lenders under the Plan at 

Confirmation.

Depository • The Oversight Board “should be required to 

immediately load into the data depository all 

data, models, and supporting materials related 

to the determination that PREPA can afford to 

pay all creditors only $5.4 billion dollars, and 

comparisons with any affordability analysis 

underlying its earlier (and much higher) 

offers.” AHG Obj. at ¶¶ 95–96.

As explained in section I.C of the Reply, there is no affordability test 

in PROMESA Title III. The Depository has been operational for 

more than four (4) weeks and the Debtor will continue to make 

available documents relevant to confirmation of the Plan. Conf. Proc. 

Mot. ¶ 36. Specifically, and as the Oversight Board explained in the 

Confirmation Procedures Motion, the Oversight Board will populate 

the Plan Depository with relevant, non-privileged documents (1) 

“relied upon by the Debtor in analyzing its assets and the various 

claims asserted” and (2) concerning the Best Interests Test Report. 

Id. Documents regarding affordability analyses do not fall within 

either category and accordingly may not be included in the Oversight 

Board’s initial upload of documents to the Plan Depository. The 

Oversight Board will of course continue to upload to the Plan 

Depository any relevant, non-privileged documents it produces in 

response to discovery requests served in accordance with an approved 

confirmation procedures order.

Further, the Oversight Board notes that it received discovery requests 

from the Ad Hoc Group on January 23, 2023. As the Oversight 

Board informed the Ad Hoc Group in its letter response, those 

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Objection Argument Response

requests were premature because they were served before the Court 

entered its confirmation discovery procedures order. Given the size 

and complexity of these proceedings, it is critical that discovery be 

conducted in the coordinated, efficient manner contemplated by the 

proposed confirmation discovery procedures in order to conserve 

PREPA’s and the Court’s resources and ensure an efficient and 

expeditious process. Accordingly, PREPA will only respond to 

discovery requests served in compliance with a court-approved 

discovery procedures order.

Third Party 

Discovery

• AAFAF and LUMA Energy should be subject 

to and required to comply with the deadlines 

in the proposed Order Establishing, Among 

Other Things, Procedures and Deadlines 

Concerning Objections to Confirmation and 

Discovery in Connection Therewith, Conf. 

Proc. Mot. Exhibit A (the “Proposed PREPA 

Conf. Proc. Order”). AHG Obj. at ¶ 97.

Pursuant to Luma’s agreements with PREPA, Luma is an 

independent contractor and is not a trustee or representative of 

PREPA pursuant to PROMESA, the Bankruptcy Code, or any other 

similar law. However, the Proposed PREPA Confirmation 

Procedures Order does not place an affirmative prohibition on third 

party discovery. 

Confirmation 

Deadlines

• Proposes changes to certain deadlines. AHG 

Obj. at ¶ 98.

The Oversight Board’s proposed schedule is designed to provide 

reasonable deadlines that allow the hearing to consider confirmation 

of the Plan to take place in July 2023. Whether this proposed 

schedule is acceptable to the Title III Court is wholly within the 

Court’s discretion. In the Oversight Board’s view, the proposed 

schedule maximizes efficiency, streamlines the proceeding, and 

manages the timetable to prepare for a confirmation hearing, all in 

support of the fair and efficient disposition of the Debtor’s Title III 

case. Accordingly, the modifications proposed by the Ad Hoc Group 

are unnecessary and unfairly prejudice PREPA.

In particular, the request to push the Oversight Board’s deadline to 

file its memorandum of law and proposed findings of fact and 

conclusions of law from June 21 to June 14 is unworkable. Such 

documents are tied to the finalization of the Oversight Board’s 

witness declarations, vote tabulation, and omnibus reply to objections 

to the Plan. Thus, the Ad Hoc Group’s proposed June 14 deadline 

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Objection Argument Response

would, in effect, provide the Oversight Board only seven (7) days to 

respond to numerous substantive confirmation objections. The 

Oversight Board should be provided its initially proposed two-week 

period to respond to multiple objections and finalize related filings 

due on the same date, which will provide the Court a more complete 

and consistent set of documents and pleadings responsive to issues 

that may be raised.

Indeed, the sole reason for the Ad Hoc Group’s request is to provide 

it with fourteen (14) days to object to the proposed findings of fact 

and conclusions of law (consistent with the procedures approved in 

connection with confirmation of the plans for the Commonwealth and 

HTA, there is no deadline to object to the Debtor’s memorandum of 

law in support of confirmation). Given the limited document at issue, 

and that all other briefing will be completed at the time the proposed 

findings of fact and conclusions of law is filed, seven (7) days is 

sufficient time for the Ad Hoc Group to review and prepare its 

objection.

Interrogatories • Parties in interest should not be limited to 

fifteen (15) interrogatories. Instead, each party 

in interest should be permitted to serve 

twenty-five (25) interrogatories pursuant to 

Rule 33 of the Federal Rules of Civil 

Procedure. AHG Obj. at ¶ 98(d).

Limiting each party in interest to fifteen (15) interrogatories is 

consistent with the number of interrogatories permitted in connection 

with the plans of adjustment for the Commonwealth and HTA. See 

Commonwealth Conf. Proc. Order ¶ 3; Order Establishing, Among 

Other Things, Procedures and Deadlines Concerning Objections to 

Confirmation and Discovery in Connection Therewith [Case No. 17-

3567, ECF No. 1249] (the “HTA Conf. Proc. Order”) ¶ 13.

Confirmation discovery protocols often do not include interrogatories 

when other, more efficient and useful discovery mechanisms are 

available. See, e.g., In re Energy Future Holdings Corp. et al., No. 

14-cv-10979 (CSS), Order (A) Scheduling Certain Hearing Dates 

and Deadlines, (B) Establishing Certain Protocols in Connection 

with the Confirmation of Debtors’ Plan of Reorganization, and (C) 

Revising Certain Dates in the Disclosure Statement Scheduling Order 

[ECF No. 4916] (Bankr. D. Del. July 2, 2015) ¶ 15 (limiting 

interrogatories to identification of witnesses). As recognized by 

several courts, interrogatories and requests for admission are 

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Objection Argument Response

inefficient discovery mechanisms when document requests and 

depositions are available. See, e.g., S.D.N.Y. L.R. 33.3(b) (“During 

discovery, interrogatories other than those seeking information 

[regarding identity of witnesses, locations of documents, or 

computation of damages] may only be served (1) if they are a more 

practical method of obtaining the information sought than a request 

for production or a deposition, or (2) if ordered by the Court”); see 

also New England Terminal Co. v. Graver Tank & Mfg. Corp., 1 

F.R.D. 411, 413-14 (D.R.I. 1940) (“In actual effectiveness 

interrogatories are far inferior to the oral examination. Their defects 

are quite obvious . . . ”) (citation omitted); Espinal v. Coughlin, No. 

98-2579, 1999 WL 1063186, at *2 n.2 (S.D.N.Y. Nov. 23, 1999) 

(observing that “the use of interrogatories is limited” and should only 

“be permitted if they are a more practical method of discovery than a 

deposition”). 

Here, given the size and complexity of the Plan and PREPA’s Title 

III case, document requests and depositions are more efficient means 

of providing information to parties in interest regarding the Plan than 

interrogatories. Nonetheless, consistent with the number of 

interrogatories permitted in connection with the plans of adjustment 

for the Commonwealth and HTA, the Proposed PREPA Confirmation 

Procedures Order provides that parties in interest may serve up to 

fifteen (15) interrogatories.

Given the Debtor’s (and many other parties’) interest in exiting Title 

III as efficiently and expeditiously as possible, responding to 

additional formal interrogatories would be impractical and would 

waste the Debtor’s limited resources when other, more effective 

means of discovery are available.

Tabulation 

Procedures 

• The Balloting Agent should be required to file 

a notice with the Title III Court before it 

makes changes to vote proportions. 

Thereafter, impacted votes should be provided 

Votes submitted through ATOP for Classes 1 and 2 will reflected in 

the principal amount only due to ATOP’s system capabilities. The 

proposed procedures provide that the Balloting Agent may thereafter 

adjust the voted amounts to reflect accrued but unpaid prepetition 

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Objection Argument Response

an opportunity to be heard regarding any 

changes. AHG Obj. at ¶¶ 101–102.

interest or accreted principal, as applicable, to reflect a holder’s 

corresponding claim amount for voting purposes. The Balloting 

Agent will also have to adjust the vote tabulation to account for 

numerosity (e.g., a single claimant may hold multiple CUSIPs of 

PREPA Revenue Bonds and submit more than one vote through 

separate nominees, which will need to be adjusted to reflect a single 

vote for numerosity purposes).

The Debtor does not anticipate any other adjustments will be made. 

Nonetheless, the vote tabulation certificate to be filed by the 

Oversight Board on behalf of Kroll in connection with the hearing to 

consider confirmation of the Plan will contain an explanation 

regarding any changes to vote proportions. The Debtor has updated 

the Proposed PREPA DS Order to provide (i) parties in interest may 

object to the vote tabulation certification by 5:00 p.m. (Atlantic 

Standard Time) on June 28, 2023 and (ii) the Debtor and other parties 

in interest may file a reply to any such objections by 5:00 p.m. 

(Atlantic Standard Time) on July 5, 2023. Proposed PREPA DS 

Order ¶¶ 15-16. Parties in interest will also have an opportunity to 

cross examine Kroll regarding the vote tabulation at the hearing to 

consider confirmation of the Plan.

Voting 

Procedures 

• The Proposed PREPA DS Order should reflect 

(i) the PREPA Revenue Bond Claims will be 

allowed for voting purposes at $8.259 billion 

plus pre-petition interest and (ii) the Rule 

3018(a) procedures are not necessary for 

Claims in Classes 1 and 2. AHG Obj. at ¶¶ 

103–105.

The Oversight Board has revised the Proposed PREPA DS Order to 

reflect the amounts PREPA Revenue Bond Claims will be allowed at 

for voting purposes. Proposed PREPA DS Order ¶ 39. The 

allowance of PREPA Revenue Bond Claims in Classes 1 and 2 solely 

for purposes of voting to accept or reject the Plan pursuant to decretal 

paragraph 39 of the Proposed PREPA DS Order shall not prejudice 

any parties in connection with the Amended Lien & Recourse 

Challenge.

The Oversight Board has revised the Proposed PREPA DS Order to

make clear notwithstanding the Amended Lien & Recourse Challenge 

holders of Claims in Classes 1 and 2 are entitled to vote. Id.

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Exhibit A Page 25 of 35
A-25

Objection Argument Response

Trading 

Restrictions 

• Holders of PREPA Revenue Bonds who 

tender their bonds through ATOP should not 

be restricted from transferring their bonds. 

AHG Obj. at ¶¶ 106–107.

The Debtor has revised the Proposed PREPA DS Order to remove the 

provision that the Debtor, in coordination with DTC, may determine 

that the bonds tendered through ATOP must be restricted from 

transferring or trading until the Effective Date. The Debtor will not 

restrict transfers to the Effective Date (except with respect to holders 

of PREPA Revenue Bonds insured by National who make a 

distribution election). However, holders of PREPA Revenue Bonds 

who tender their bonds through ATOP to vote will be restricted from 

transferring their bonds until immediately after the voting tabulation 

has been filed (anticipated to be on or before June 21, 2023). 

Proposed PREPA DS Order ¶ 36. 

Bond Trustee Objection

Settlement • The Oversight Board cannot offer to settle 

bondholder claims on a pro rata basis as the 

individual bondholders do not have the right 

under the Trust Agreement to settle claims 

unilaterally. Trustee Obj. pp. 2 – 8.

The Oversight Board has the discretion to classify classes of claims 

pursuant to section 1122 of the Bankruptcy Code, and the holder of a 

claim has the right to vote the claim pursuant to section 1126 of the 

Bankruptcy Code, notwithstanding any provisions of the Trust 

Agreement to the contrary, including any provisions which may grant 

the Trustee control over litigation and enforcement related to the 

bonds and the Trust Agreement. See In re Young Men’s Christian 

Ass’n of Topeka, Kansas, 2020 WL 7483739, at *3 (Bankr. D. Kan. 

Dec. 14, 2020) (the bondholders, not the trustee, constituted “holders 

of a claim or interest” and therefore allowed to vote per 11 U.S.C. § 

1126, despite the fact that the trustee filed a proof of claim on behalf 

of the bondholders). Nothing in the Trust Agreement gives the 

Trustee the right to control claims in a bankruptcy proceeding even if 

that was legally permissible. The Oversight Board, as the only party 

that has the right to propose a Title III plan of adjustment for PREPA, 

PROMESA § 312(a), has created two classes of claims into which 

Holders of PREPA Revenue Bonds Claims have been placed, and, 

pursuant to the settlement offer, is offering such Holders the 

opportunity choose one or the other class. The election does not alter 

the Trust Agreement in any manner. 

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Objection Argument Response

There is no dispute that the Trustee is the holder of any security 

interest for the benefit of bondholders (Obj. p.3) and, indeed, it is 

refreshing to see the Trustee agree with the Oversight Board’s 

position in the Lien Challenge—that the Trustee is the only holder of 

the lien granted by the Trust Agreement. Nonetheless, issues 

pertaining to which party is the lienholder, and the collective action 

provisions in the Trust Agreement more generally, are not relevant 

for purposes of classifying a claim in accordance with the results of 

the settlement offer, or plan voting under the Bankruptcy Code. See

In re Allied Owners’ Corp., 74 F.2d 201, 203 (2d Cir. 1934), 

corporate trustees, while permitted to file proofs of claim, are not 

entitled to vote on the plan or reorganization unless the trust indenture 

specifically authorizes them so to do. (quoting In re Prudence Co., 22 

F. Supp. 264, 266 (E.D.N.Y. 1937)). The issue of who holds the lien 

is only relevant for purposes of adequate protection, and that issue is 

not implicated by individual bondholders’ selecting which class to be 

in for voting purposes. Further, PROMESA section 301(c)(3) 

provides an exception that monoline insurers, in certain 

circumstances, can vote the insured holders’ claim—that exception 

would have been meaningless if the trustee would have been the one 

that can vote the claim. 

The Trustee’s argument that individual bondholders have neither the 

ability to settle “any separate portion” of the claims held by the 

Trustee, nor the right to have any portion of the settlement value of 

the Trustee’s claim diverted to their own benefit (at p.5), ignores both 

the Bankruptcy Code’s granting of the power to vote claims to the 

bondholders and the ubiquitous practice of debtors entering into 

restructuring support or plan agreements with some, but not all, 

holders of bonds issued by a debtor, as was done in the 2019 RSA 

and, most recently, with National, and has been the cornerstone of 

other Title III plans of adjustment. It also ignores that individual 

claimholders are not seeking a remedy on behalf of all bondholders, 

but classification of solely their individual claim. No one would 

dispute that individual bondholders can sell their individual bond at 

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Objection Argument Response

any price they would accept. So too can individual bondholders can 

choose to settle their claim directly with the debtor. 

Adequate 

Information 

• The Disclosure Statement provides incomplete 

and unclear information about Series B Bonds 

and CVI, including inadequate information 

regarding the relationship between the Legacy 

Charge and Net Revenues. Trustee Obj. pp. 10 

– 12. 

The definitions in the Plan regarding the structure of the New Bonds 

and CVI are explained in Section VI.F.1 of the Disclosure Statement, 

and information regarding the Legacy Charge and Net Revenues are 

explained in Section II.B.3 of the Disclosure Statement. Specifically, 

Section VI.F.5(ii) of the Disclosure Statement provides that: 

The CVI shall be secured by Reorganized PREPA’s 

Remaining Net Revenues up to an amount equal to the 

Remaining Legacy Charge Revenues and the right to receive 

such Remaining Net Revenues up to an amount equal to the 

Remaining Legacy Charge Revenues, as more particularly 

described in the New Master Indenture.

Additionally, in light of the Trustee’s objection, the Oversight Board 

has updated the definition of Revenues to include monies collected by 

LUMA for the benefit of Reorganized PREPA. 

The Trustee’s objection that the Oversight Board must specifically 

project Net Revenues (Obj. p.12) is also misplaced. Exhibit D of the 

Disclosure Statement provides the load forecast and illustrative cash 

flow to the New Bonds based on Net Revenues following 

implementation of the Legacy Charge. The Net Revenues are based 

on the 2022 Certified PREPA Fiscal Plan. In any case, PREB is 

required under Puerto Rico law to “[e]nsure that the powers and 

authorities exercised by PREB over the Authority....including those 

related to rate review or approval, guarantee that the Authority meets 

its obligations to bondholders.” Act 17-2019 § 6.3(p). If PREB does 

not set rates sufficient to cover operating expenses, holders of New

Bonds may seek enforcement of the Interest Rate Covenant.

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Objection Argument Response

• The Disclosure Statement provides incomplete 

information regarding the duty of Reorganized 

PREPA to Earn Net Revenues to fund the 

Series B Bonds and CVI. Trustee Obj. pp. 12 

– 13. 

The Disclosure Statement provides a detailed description concerning 

the New Bonds and CVI in Section VI.F.1-20.

The Oversight Board has updated the Plan to provide certain benefits 

to the Series B Bonds, including the interest rate covenant, which was 

previously only for the benefit of the Series A Bonds.

• The remedies supporting the New Bonds and 

CVI are unclear. Trustee Obj. pp. 13 – 14. 

The Limited Remedies relating to the issuance of the New Bonds and 

CVI are explained in Section VI.F.13 of the Disclosure Statement and 

will be set forth further in the New Master Indenture. 

• The Disclosure Statement is unclear about the 

proposed collateral for the New Bonds. 

Trustee Obj p. 15. 

Section VI.F.5 of the Disclosure Statement explains that the New 

Bonds will be secured by Reorganized PREPA’s Net Revenues up to 

an amount equal to the Legacy Charge Revenues and the right to 

receive such Net Revenues up to an amount equal to the Legacy 

Charge Revenues. Further details will be set forth in the New Master 

Indenture. 

• The New Master Trust Agreement should be 

made available prior to the hearing on the 

Disclosure Statement. Trustee Obj. p. 15-16.

The Plan sets forth, in Article XIX, provisions regarding the New 

Bonds and material terms with respect thereto to be contained in the 

New Master Indenture. The Oversight Board will file the New Master 

Trust Indenture as part of the Plan Supplement seven days before the 

Voting Deadline. This timing is identical to the schedules utilized in 

the Commonwealth and HTA Title III Cases. See [ECF Nos. 18470, 

18258 in Case No. Case No. 17-3283]; [ECF Nos. 18470, 18258 in 

Case No. 17-3283]. This is customary in chapter 11 bankruptcy cases 

as well. The Bond Trustee provides no compelling reason as to why 

the Oversight Board must deviate from this practice here for 

claimholders to cast an informed vote on the Plan.

• The Disclosure Statement fails to disclose 

adequate information regarding the treatment 

of insured bonds and monoline policies. 

Trustee Obj. p. 17.

The Trustee’s objection relates to the substance of the Plan, rather 

than adequate disclosure. Accordingly, it should be considered in 

connection with confirmation, rather than the disclosure statement 

stage. Nonetheless, the holder of insured bond claims will receive the 

consideration provided pursuant to the Plan. The mechanisms in the 

Commonwealth’s Title III plan of adjustment were incorporated as a 

result of plan support agreements with the Monolines. Accordingly, 

the Plan incorporates these mechanisms for National. If a settlement 

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Objection Argument Response

is reached with any additional Monolines, the Oversight Board will 

incorporate relevant mechanisms, if requested. Absent such 

settlement(s), the Oversight Board will not incorporate these 

mechanisms in the Plan, as the relative rights of an insured 

bondholder and its monoline insurer should otherwise be resolved 

between the parties in accordance with their relevant insurance 

policies. 

• The Disclosure Statement fails to disclose that 

certain federal subsidy monies held by the 

PREPA Bond Trustee may be subject to 

unique lien rights of the Series EEE and YY 

Bonds. Trustee Obj. p. 17.

The Plan has been clarified to indicate that Sinking Fund distributions 

shall be made subject to the terms of the Trust Agreement. Plan 

Article IV.A(i) & Article V.A(i).

Syncora Objection

Patently 

Unconfirmable

• The Plan reflects a mere “placeholder” in 

violation of Court directives. Syncora Obj. ¶ 

22.

This is addressed in detail in the Reply. See Reply Section II.B.

• The Plan is not based on what PREPA can pay 

and the legal foundation for the Plan is fatally 

flawed. Syncora Obj. ¶ 24.

This is addressed in detail in the Reply. See Reply Section I.C.

• The Plan cannot be confirmed regardless of 

the outcome of the Amended Lien & Recourse 

Challenge. Syncora Obj. ¶¶ 32-35.

This is addressed in detail in the Reply. See Reply Section II.B.

In addition, the Oversight Board has proposed a Plan that is 

confirmable under every outcome of the Amended Plan & Recourse 

litigation the Oversight Board deems to be realistic. See Section II.B 

at page 30 of the Disclosure Statement for a chart outlining the 

potential recoveries for bondholders depending on the outcome of the 

litigation. Syncora’s argument assumes the bond parties will prevail 

on the Lien and Recourse counts and they prevail at confirmation that 

bondholders’ liens are worth more than the consideration provided 

under the plan. But that is an issue that requires factual development. 

There are numerous scenarios, even by bondholders' own admission, 

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Objection Argument Response

where the plan is confirmable, and therefore the Plan is not patently 

unconfirmable nor a placeholder plan.

There is no unfair discrimination between bondholders and Fuel Line 

Lenders because the Fuel Line Lenders assert priority over the 

bondholders. Under PROMESA section 301(e) the Oversight Board 

must consider "whether such claims have priority over other claims" 

in determining classification under Bankruptcy Code section 1122. 

The Oversight Board proposes to pay bondholders, including 

National and Settling Bondholders, under the Plan. If the Fuel Line 

Lenders prevailed in their priority assertion, the Oversight Board 

would have to pay them in full. Instead, the Oversight Board has 

determined to settle those claims in a materially reduced amount, thus 

avoiding the risk involved in the Current Expense Litigation.

• The Plan does not satisfy the best interest of 

the creditors test. Syncora Obj. ¶ 39.

The best interests test is an issue for confirmation that requires factual 

development. As addressed in detail in the Reply, this issue cannot 

render the Plan patently unconfirmable. See Reply Section I.C.

Good Faith • The Plan was not proposed in good faith 

Syncora Obj. ¶ 45.

The Oversight Board filed a toggle plan as directed by the Court, and 

as requested by Syncora and other bondholders. As addressed in 

detail in the Reply, the Plan is proposed in good faith because it 

satisfies Title III’s requirements. See Reply Section I.D. 

Nevertheless, this is an issue that would require factual development 

and therefore is inappropriately raised by bondholders at this 

juncture. The Oversight Board will demonstrate at confirmation that 

the proposal of the Plan meets the good faith standard.

Gerrymandering • The Plan impermissibly gerrymanders 

Syncora Obj. ¶ 53.

This is addressed in detail in the Reply. See Reply Section I.A.

Solicitation • The settlement offer to bondholders is an 

improper solicitation in violation of section 

1125(e). Syncora Obj. ¶¶ 61–68. 

This is addressed in detail in the Reply. See Reply Section I.F.

Bondholders agreeing to the settlement offer may still vote to accept 

or reject the Plan. Accordingly, there can be no improper solicitation 

of votes, as no votes were solicited in connection with the settlement 

offer. Further, the settlement offer does not allow the Oversight 

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Objection Argument Response

Board to seek specific performance to compel votes in favor of or in 

opposition to the Plan. 

The authority Syncora cites in favor of its position that the Settlement 

Offer is an “untimely solicitation” concludes in favor of the Oversight 

Board. The full quote cited by Syncora (Obj. ¶ 65) in Century Glove

reads: 

We recognize that § 1125(b) bars the untimely solicitation of 

an "acceptance or rejection," indicating that the same 

definition applies to both. A narrow definition might allow a 

debtor to send materials seeking to prepare support for the 

plan, "for the consideration of the creditors," without 

adequate information approved by the court. Though such 

preparatory materials may undermine the purpose of 

adequate disclosure, the potential harm is limited in several 

ways. First, a creditor still must receive adequate information 

before casting a final vote, giving the creditor a chance to 

reconsider its preliminary decision. The harm is further 

limited by free and open negotiations between creditors. Last, 

because they are not "solicitations," pre-disclosure 

communications may still be subject to the stricter limitations 

of the securities laws. 11 U.S.C. § 1125(e). Where, as here, 

the creditors are counselled and already have received 

disclosure about the debtor's business, there seems little need 

for additional procedural formalities. See e.g., In re 

Northwest Recreational Activities, Inc., 4 B.R. 43 (Bankr. 

N.D.Ga. 1980) (negotiations between debtor and creditor 

precede § 1125(b) approvals).

Century Glove, Inc. v. First American Bank, 860 F.2d 94, 102 (3d 

Cir. 1988). The Century Glove court’s conclusion that solicitation is 

only a “specific request for an official vote” is consistent with the 

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Objection Argument Response

Oversight Board’s solicitation process and further explained in 

Section I.F of this Reply. 

Adequate 

Information

• The Disclosure Statement does not contain 

any analysis on how much PREPA could 

afford to pay creditors or how proposed 

electricity rates relate to affordability. Syncora 

Obj. ¶ 71.

Bankruptcy Code section 1125 expressly negates any requirement to 

describe alternate plans. Schedule B of the Amended Plan provides 

for the Legacy Charge rates. Exhibit P of the Disclosure Statement 

provides the explanation of the Oversight Board methodology and 

determination of the Legacy Charge based upon many consideration 

including affordability and sustainability.

A description of the rates applicable to the various customer classes 

and exemptions is provided in Part II.B.3.iii of the Disclosure 

Statement. The Oversight Board maintains, however, that the 

maximum “affordability” of debt for PREPA is not a relevant inquiry 

at confirmation.

• The Disclosure Statement lacks any

information that could assist a bondholder in 

determining whether a Plan is “fair and 

equitable,” or in the “best interests” of 

creditors. Syncora Obj. ¶ 71.

Syncora does not identify any specific, let alone legitimate, 

inadequacy of the Disclosure Statement. The Oversight Board’s best 

interest analysis has been filed as directed by the Court on January 

27, 2023. Whether the Plan is “fair and equitable” is a confirmation 

issue that requires factual development, and therefore Syncora 

inappropriately raises it in its objection to the Disclosure Statement. 

Finally, whether potential distributions through a plan of adjustment 

are the maximum PREPA can afford to pay is not an element to either 

disclosure statement approval or plan confirmation. As a result, the 

Oversight Board holds no obligation to divulge such information.

Assured Objection

Adequate 

Information 

• The Disclosure Statement fails to include a 

description of the swap claims. Assured Obj. 

¶¶ 23 – 24. 

The Oversight Board has met and conferred with Assured and agreed 

to add the language in the Disclosure Statement requested by 

Assured.

1. Summary of Swap Claims: PREPA is currently a party to two 

interest rate swaps, with JPMorgan Chase Bank N.A. and UBS AG as 

counterparties, with notional amounts of $169.53 million and $83.34 

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Objection Argument Response

million respectively. Both swaps mature on July 1, 2029. Given that 

swap payments are calculated periodically, the estimated amount of 

such payments (including termination damages) is not presently 

ascertainable.

2. Language Concerning Potential Settlement of Swap Claims 

(Disclosure Statement p. 258): The Holder of Assured Insured 

Interest Rate Swaps Claims shall be entitled to settle claims, rights, 

and remedies against PREPA arising under the swap agreements and 

applicable law (including, without limitation, claims arising under the 

Bankruptcy Code safe harbor provisions).

• The Disclosure Statement does not explain 

why the Amended Lien & Recourse Challenge 

is relevant to the Swap recoveries. Assured 

Obj. ¶¶ 25 – 30.

The Oversight Board has met and conferred with Assured and agreed 

to add language to the Disclosure Statement as follows:

The Assured Insured Interest Rate Swap Claims were to have 

received substantially the same treatment as settled bond claims under 

the 2019 RSA. The Assured Insured Interest Rate Swap Claims have 

the same priority, if any, as the PREPA Revenue Bond Claims, which 

the Oversight Board believes is the basis for the Plan’s provisions 

affording the swap claims with the same treatment as the bond claims 

and for the related references in the Plan to the Amended Lien & 

Recourse Challenge. The outcome of the Amended Lien & Recourse 

Challenge, therefore, would impact their recoveries in the same 

manner it would impact holders of claims in Class 1 or Class 2.

• The Disclosure Statement contains inadequate 

information regarding the risks and 

contingencies for distributions to the swap 

claim holders. Assured Obj. ¶¶ 31 – 34.

The Oversight Board will add a risk factor related to treatment of the 

of the Assured Insured Interest Rate Swap Claims as follows:

Payments to the Holder of the Assured Insured Interest Rate Swap 

Claims are subject to entry of a final order determining the amount, if 

any, of the allowed claim. The timing of a settlement or final order 

on the amount of the claim is uncertain, and may occur after the 

Effective Date, which would delay distributions to the holder 

thereof. To the extent the amount of the Assured Insured Interest 

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Objection Argument Response

Rate Swap Claim is unliquidated as of the Effective Date, the 

Oversight Board will demonstrate at confirmation it has the ability to 

make payments on such claim if and when such claim is allowed after 

the Effective Date. Each Assured Insured Interest Rate Swaps Claim 

shall be Allowed in an amount to be agreed upon between the 

Oversight Board and the Holder of such Claim; provided that, if no 

agreement can be reached on the amount of the Assured Insured 

Interest Rate Swaps Claim to be Allowed, the Oversight Board and 

Holder of the Claim shall submit such dispute to the Title III Court 

(or other Person or Entity upon mutual agreement of the Oversight 

Board and Holder) to determine the amount of such Claim to be 

Allowed, which amount shall be determined in accordance with 

applicable law.

Voting 

Procedure

• Holders of matured bonds no longer held 

through DTC should vote by Ballot rather than 

through ATOP. Assured Obj. at ¶¶ 35–37.

The Oversight Board has revised the Proposed PREPA DS Order to 

permit holders of matured bonds no longer held at DTC to vote by 

Ballot instead of through ATOP. Proposed PREPA DS Order ¶ 7, FN 

7; ¶ 33; ¶ 41; Schedule 3(e).

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