Exhibit 1

Case:17-03283-LTS Doc#:24407-1 Filed:06/02/23 Entered:06/02/23 19:55:29 Desc:

Exhibit 1 - D. Brownstein Deposition Page 1 of 21
1

2 IN THE UNITED STATES DISTRICT COURT

 FOR THE DISTRICT OF PUERTO RICO

3 Case No. 17-BK-3283-LTS

 ----------------------------------------x

4 In re:

5 THE FINANCIAL OVERSIGHT AND MANAGEMENT

 BOARD FOR PUERTO RICO,

6

 as representative of

7

 THE COMMONWEALTH OF PUERTO RICO, et al.,

8

 Debtors.

9 -----------------------------------------x

 Case No. 17-BK-4780-LTS

1 0 -----------------------------------------x

 In re:

1 1

 THE FINANCIAL OVERSIGHT AND MANAGEMENT

1 2 BOARD FOR PUERTO RICO,

1 3 as representative of

1 4 THE PUERTO RICO ELECTRIC POWER AUTHORITY,

1 5 Debtor.

 ----------------------------------------x

1 6 May 16, 2023

 9:31 a.m.

1 7

1 8 VIDEOTAPED DEPOSITION of DAVID

1 9 BROWNSTEIN, held at the offices of Kramer

2 0 Levin Naftalis & Frankel LLP, located at 1177

2 1 Avenue of the Americas, New York, New York

2 2 10036, before Anthony Giarro, a Registered

2 3 Professional Reporter, a Certified Realtime

2 4 Reporter and a Notary Public of the State of

2 5 New York.

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Exhibit 1 - D. Brownstein Deposition Page 2 of 21
1 DAVID BROWNSTEIN

2 you --

3 Q Let me try it a different

4 way. I don't want you to answer a

5 question you don't understand.

6 What information, if any,

7 did you provide to board members

8 concerning proposals to the fuel line

9 lenders?

1 0 A All proposals to and from

1 1 the fuel line lenders were reviewed and

1 2 approved by the board.

1 3 Q How many rounds of

1 4 back-and-forth proposals and

1 5 counterproposals were there?

1 6 MR. MERVIS: I think I have

1 7 to instruct the witness not to answer

1 8 that question on the basis of

1 9 mediation confidentiality.

2 0 Q You plan to testify at the

2 1 confirmation hearing, do you not, that

2 2 the fuel line lenders' settlement is

2 3 reasonable; correct?

2 4 A Yes.

2 5 Q So I'm just trying to get at

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Exhibit 1 - D. Brownstein Deposition Page 3 of 21
1 DAVID BROWNSTEIN

2 puts the mediators into the mix,

3 which is not, I don't think -- we

4 won't do that. And you asked the

5 question about how many proposals

6 went back and forth. And I think

7 that that process is -- that process

8 does get into mediation privilege. I

9 realize that some of these are

1 0 judgment calls. And people can

1 1 disagree. But that's where I'm

1 2 landing.

1 3 MR. MADDEN: Maybe to cut to

1 4 the chase, if I were to ask

1 5 additional questions about the

1 6 process as between the oversight

1 7 board and the fuel line lenders and

1 8 mediation that led to the agreement

1 9 to the fuel line lenders' PSA, is it

2 0 fair to say you'll instruct the

2 1 witness not to answer those process

2 2 questions?

2 3 MR. MERVIS: Probably. But

2 4 I can think, for example, of a -- and

2 5 I don't mean to play -- so, for

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Exhibit 1 - D. Brownstein Deposition Page 4 of 21
1 DAVID BROWNSTEIN

2 example, you know, who was this

3 negotiation counterpart, I think

4 that's fair. But there's a place.

5 There's a line; right? It's not

6 necessarily a bright line. One

7 bright line, I will say, in terms of

8 what went back and forth, yeah, that,

9 I'm going to instruct not to answer.

1 0 Q You've already told me who

1 1 your counterparts are. So I'll move on.

1 2 Mr. Brownstein, what

1 3 benefits, if any, does the fuel line

1 4 lenders' PSA provide to PREPA?

1 5 MR. MERVIS: Just note my

1 6 objection to the form. But you can

1 7 answer.

1 8 A As I said previously,

1 9 without that, without knowing what amount

2 0 we were going to be paying them and

2 1 whether, in fact, they were -- which

2 2 means whether they were entitled to

2 3 priority, we wouldn't have been able to

2 4 make an offer to the bondholders that

2 5 took the wallet we have available and put

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1 DAVID BROWNSTEIN

2 Q And what was the nature of

3 your involvement in that process?

4 A I worked with the board and

5 Proskauer to negotiate the agreement we

6 have with National and the document that

7 we executed with them.

8 Q And with whom did you

9 principally interact on the National

1 0 side?

1 1 A I guess I would have to say

1 2 Trish would have been my primary contact.

1 3 Q And what's Trish's full

1 4 name, if you know? If you don't recall

1 5 right now, that's okay.

1 6 A She just retired. So I'm

1 7 trying to forget her. I didn't really

1 8 mean that second part. But I can't tell

1 9 you why -- hold on.

2 0 Q We'll come back to it.

2 1 A No, no, no. I have to find

2 2 it, or I'll kill myself. Ferrari.

2 3 Q When did negotiations toward

2 4 the National PSA began?

2 5 A During mediation.

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1 DAVID BROWNSTEIN

2 Q Early in mediation, middle

3 in mediation, toward the end?

4 A Early to in the middle.

5 Q Sorry?

6 A Early to in the middle is

7 the best I can do for you.

8 Q And was the mediation team

9 involved in those negotiations?

1 0 MR. MERVIS: That one, I'm

1 1 going to instruct the witness not to

1 2 answer that question.

1 3 Q Did you discuss the

1 4 National -- do you need a break?

1 5 A No. Sorry.

1 6 Q Did you discuss the National

1 7 negotiations directly with oversight

1 8 board members?

1 9 A Yes.

2 0 Q Did you update the oversight

2 1 board members on proposals to and from

2 2 National?

2 3 A I think I said this before.

2 4 But just to be clear, no proposal was

2 5 made to National without board approval.

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1 DAVID BROWNSTEIN

2 at the 71.65 percent exchange ratio that

3 the oversight board offered and agreed to

4 with National?

5 MR. MERVIS: Hold on. I

6 object to the form. You can answer.

7 A Well, I unfortunately can't

8 answer because my responses are mediation

9 privileged.

1 0 Q You can't answer without

1 1 revealing mediation privilege why the

1 2 oversight board in its plan of adjustment

1 3 did not offer to all PREPA bondholders

1 4 the same exchange ratio that it offered

1 5 and agreed to with National?

1 6 A Correct.

1 7 Q What is the basis on which

1 8 the settlement with National is in your

1 9 view reasonable when all PREPA

2 0 bondholders were being offered a

2 1 50 percent exchange ratio under the plan

2 2 of adjustment?

2 3 MR. MERVIS: I object to the

2 4 form. But answer if you're able to.

2 5 A I'm unable to answer that

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1 DAVID BROWNSTEIN

2 question as well.

3 Q The oversight board has

4 disclosed that one of the subjects of

5 your testimony at the confirmation

6 hearing will be that the settlement the

7 oversight board achieved with National is

8 fair and reasonable; correct?

9 A Correct.

1 0 Q What is the basis on which

1 1 you plan to testify that the National

1 2 settlement is fair and reasonable when

1 3 all PREPA bondholders were offered only a

1 4 50 percent exchange ratio under the plan

1 5 of adjustment?

1 6 MS. SPILLANE: Objection to

1 7 form.

1 8 MR. MERVIS: Object to the

1 9 form of the question.

2 0 You want to hear it back?

2 1 THE WITNESS: No. I

2 2 understand his question.

2 3 A I just don't know how to not

2 4 say it's mediation privilege. So I can

2 5 walk it through with you.

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1 DAVID BROWNSTEIN

2 Q And I want to put aside for

3 the moment, the treatment of the settled

4 reimbursement claim that National has

5 under the PSA.

6 A Okay.

7 Q Just focusing on the

8 treatment under the PSA of National's

9 bond claim, were the two terms you just

1 0 described different than the ones that

1 1 were offered to all PREPA bondholders

1 2 under the plan of adjustment?

1 3 MR. MERVIS: You mean the --

1 4 well, okay. Objection to the form.

1 5 You mean the 50-cent?

1 6 Q You just described a number

1 7 of things National agreed to, an exchange

1 8 ratio.

1 9 A Yeah. I hear you.

2 0 Q The treatment of the CVI and

2 1 some other things.

2 2 Was that package of terms

2 3 the one that was offered to all PREPA

2 4 bondholders under the plan of adjustment?

2 5 MR. MERVIS: That's a

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1 DAVID BROWNSTEIN

2 different question. That one, I

3 object to the form.

4 A I'm not in a position to

5 answer that.

6 Q You don't know whether

7 that's the offer of settlement that was

8 made pursuant to the plan of adjustment?

9 A No. I am not prepared to

1 0 answer that, given mediation.

1 1 MR. MERVIS: I agree with

1 2 it, at least the way it's phrased.

1 3 MR. MADDEN: Maybe I'm

1 4 misspeaking. I don't think my

1 5 question comes anywhere close to

1 6 mediation privilege.

1 7 Q My question is just whether

1 8 the package of terms that you agreed to

1 9 with National on its bond claim, is that

2 0 the same or different from the offer of

2 1 settlement that was made to all PREPA

2 2 bondholders under the terms of the plan

2 3 of adjustment?

2 4 A Right. And what I'm saying

2 5 to you is, in my view, that answer to

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1 DAVID BROWNSTEIN

2 that question incorporates things that

3 are mediation privilege. So I can't

4 answer.

5 Q I don't know how that could

6 be. But we'll move on.

7 A Okay. You should talk to

8 your attorneys who have been involved in

9 mediation and ask them to explain why I

1 0 would be uncomfortable with it.

1 1 Q I want to limit my question

1 2 to the terms of the National PSA.

1 3 A I understand what you're

1 4 asking.

1 5 Q Same answer?

1 6 A Same answer.

1 7 Q Under the terms of the

1 8 initial plan of adjustment that was

1 9 proposed the same day that the board

2 0 announced a settlement in principal with

2 1 National, you know the plan I'm talking

2 2 about in December?

2 3 A Yes.

2 4 Q Under the terms of that

2 5 December plan, could National have

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1 DAVID BROWNSTEIN

2 Brattle would have a view on?

3 A Correct.

4 Q Shifting topics, you refused

5 to answer questions of Mr. Madden about

6 the National settlement on the basis of

7 mediation privilege. Do you remember

8 that?

9 MR. MERVIS: Objection.

1 0 A Yes.

1 1 Q Mr. Brownstein, you don't

1 2 believe proposals that are made in

1 3 mediation are relevant to any issue in

1 4 the plan; correct?

1 5 MR. MERVIS: Objection to

1 6 the form.

1 7 MS. SPILLANE: Objection to

1 8 the form.

1 9 A Can you ask that question

2 0 again?

2 1 Q Yes.

2 2 Do you think that proposals

2 3 that are made in mediation are relevant

2 4 to any issues concerning whether this

2 5 plan should be confirmed?

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1 DAVID BROWNSTEIN

2 MR. MERVIS: Same objection.

3 A I think that the challenge

4 we have is that in order to properly

5 answer those questions, I would need to

6 be able to describe what happened in

7 mediation. And I don't know how to split

8 the two. I wish I could, so that we

9 could come up with an answer to your

1 0 question. I'm trying to avoid going out

1 1 of school on mediation which I really

1 2 need to be very cautious about.

1 3 So if your question is, do

1 4 you think the offers that were made in

1 5 mediation impact what happens outside of

1 6 mediation, is that your question to some

1 7 extent?

1 8 Q Let me try it a different

1 9 way.

2 0 Do you agree that the plan

2 1 should be confirmed or not based on its

2 2 own terms without regard to what happened

2 3 in mediation?

2 4 MR. MERVIS: Objection to

2 5 the form.

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1 DAVID BROWNSTEIN

2 A I'd say probably not. There

3 have been discussions between Proskauer

4 and the GUCs attorneys away from me.

5 Q Thank you.

6 Let me hand you Exhibit 36,

7 only in the event that you want to refer

8 to it. But I'm going to ask you

9 questions. You may elect not to look at

1 0 it.

1 1 In here, it says that Mr.

1 2 Brownstein -- and for the record, that is

1 3 the debtors' opening expert report and

1 4 disclosures.

1 5 And I'm looking at page 4,

1 6 the second full paragraph where it

1 7 says, "As to Topics Romanette IV and

1 8 V" -- and those topics are identified on

1 9 the previous page 3 at the top --

2 0 negotiation of the National PSA, fuel

2 1 line lender PSA, including the benefits

2 2 and the basis for the releases and

2 3 professional fees provided in connection.

2 4 It says, "Mr. Brownstein is

2 5 expected to testify to the extent

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1 DAVID BROWNSTEIN

2 consistent with mediation privilege."

3 I'd like to ask you, what

4 does that mean to you, consistent with

5 mediation privilege?

6 A So as I believe it is set up

7 is any negotiations with creditors, any

8 proposals made to them, any responses we

9 receive from them in the mediation

1 0 process remain privileged.

1 1 Q Thank you.

1 2 And the mediation process,

1 3 is that when you're all together with the

1 4 mediator, does it include between

1 5 mediation sessions? How do you define

1 6 mediation process?

1 7 A It's while mediation is

1 8 ongoing. So whether we're in a mediation

1 9 session or not is not germane to it.

2 0 We're in mediation. We engage with the

2 1 other parties in rooms together with the

2 2 mediators and separately as we move

2 3 forward.

2 4 Q So would that include

2 5 anytime before you actually get together

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1 DAVID BROWNSTEIN

2 with the mediator for the first time?

3 MR. MERVIS: I object to the

4 form.

5 A No.

6 Q So would it be fair to say

7 that you believe the mediation process

8 would be from the first mediation until

9 either there is an impasse or a

1 0 settlement?

1 1 MR. MERVIS: Object to the

1 2 form.

1 3 A Correct.

1 4 Q And during that mediation

1 5 process, you believe that the privilege

1 6 applies as to negotiations, proposals,

1 7 counterproposals and other communications

1 8 between the mediating parties?

1 9 A Correct.

2 0 Q Now, you've invoked the

2 1 privilege several times this afternoon.

2 2 Do you currently intend to

2 3 waive any of those privileges when you're

2 4 called to testify at a confirmation

2 5 hearing?

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1 DAVID BROWNSTEIN

2 that made economic sense for them.

3 Q And that's a benefit to

4 PREPA?

5 A That's a benefit to our --

6 to the entire means to get out of

7 bankruptcy.

8 Q And these benefits, those

9 three benefits would also be benefits

1 0 for -- to PREPA from the National PSA?

1 1 A Yes. Sorry. I was talking

1 2 about both. No. National's case, not

1 3 with respect to the issue of getting to a

1 4 known recovery with them obviously.

1 5 Q Now, in the same paragraph,

1 6 it says, "Mr. Brownstein will base this

1 7 testimony on his personal participation

1 8 in the negotiation of the National PSA

1 9 and fuel line lender PSA."

2 0 My question is, was that

2 1 negotiation as to either one of those

2 2 PSAs outside of the mediation context?

2 3 A No.

2 4 Q So is it your belief that

2 5 your personal participation in the

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1 DAVID BROWNSTEIN

2 negotiation of those two PSAs would also

3 be encompassed by the mediation

4 privilege?

5 MR. MERVIS: Object to the

6 form.

7 A Well, those agreements are

8 now in the public domain.

9 Q Correct.

1 0 A So it changes to some

1 1 extent, not in full, but what we could

1 2 talk about. I mean the dialogue we had

1 3 with National along the way is something

1 4 I'd be concerned about. The negotiations

1 5 of the agreement and the deliberations by

1 6 the board, I'd be concerned about. But

1 7 explaining what the agreement is, is no

1 8 longer mediation privileged. It's in the

1 9 public domain.

2 0 Q Why would you be concerned

2 1 about the dialogue with National?

2 2 MR. MERVIS: I object to the

2 3 form.

2 4 A Well, again, as I said, this

2 5 is something we're going to have to talk

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1 DAVID BROWNSTEIN

2 with people about and get sign-offs on.

3 I'm not going to make my own decision as

4 to what we can and can't do without

5 talking to people who also are impacted

6 by it.

7 Q You also -- this disclosure

8 indicates Mr. Brownstein will base his

9 testimony on his personal participation

1 0 in or supervision of communications

1 1 between and among advisors to the

1 2 oversight board.

1 3 Are those communications all

1 4 encompassed by the mediation privilege in

1 5 your view?

1 6 MR. MERVIS: Objection to

1 7 the form.

1 8 A No.

1 9 Q Which advisors do you refer

2 0 to in that disclosure?

2 1 A Well, you'd be talking about

2 2 Ernst & Young, McKinsey and Brattle.

2 3 Those are the three other advisors to the

2 4 board.

2 5 Q We spoke earlier about the

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1

2 C E R T I F I C A T I O N

3

4

5 I, ANTHONY GIARRO, a Shorthand Reporter

6 and a Notary Public, do hereby certify that

7 the foregoing witness, DAVID BROWNSTEIN, was

8 duly sworn on the date indicated, and that the

9 foregoing, to the best of my ability, is a

10 true and accurate transcription of my

11 stenographic notes.

12 I further certify that I am not employed

13 by nor related to any party to this action.

14

15

16 <%5259,Signature%>

 ____________________

17 ANTHONY GIARRO

18

19

20

21

22

23

24

25

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