7294871.3 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO, 

 as representative of 

THE COMMONWEALTH OF PUERTO 

RICO, et al., 

Debtors.1

PROMESA 

Title III 

Case No. 17-BK-3283-LTS 

(Jointly Administered) 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO, 

 as representative of 

PUERTO RICO ELECTRIC POWER 

AUTHORITY, 

 Debtor. 

PROMESA 

Title III 

Case No. 17-BK-04780-LTS 

Court Filing Relates Only to 

PREPA and Shall Only be Filed 

In Case No. 17-BK-04780-LTS and 

Main Case 17-BK-3283-LTS

OBJECTION OF ARC AMERICAN, INC. TO URGENT MOTION OF THE 

FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO FOR 

ENTRY OF ORDER CLARIFYING SCOPE OF INTERIM HEARING ON URGENT 

JOINT MOTION OF THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD 

FOR PUERTO RICO AND THE PUERTO RICO FISCAL AGENCY AND FINANCIAL 

ADVISORY AUTHORITY FOR ENTRY OF INTERIM AND FINAL ORDERS (A) 

AUTHORIZING POSTPETITION SECURED FINANCING, (B) GRANTING PRIMING 

LIENS AND PROVIDING SUPERPRIORITY ADMINISTRATIVE EXPENSE CLAIMS, 

 

1

 The Debtors in these title III cases, along with each Debtor's respective title III case number listed as a bankruptcy 

case number due to software limitations and the last four (4) digits of each Debtor's federal tax identification 

number, as applicable, are the (i) Commonwealth of Puerto Rico (Bankruptcy Case No. I7-BK- 3283 (LTS)) (Last 

Four Digits of Federal Tax ID: 3481), (ii) Employees Retirement System of the Government of the Commonwealth 

of Puerto Rico ("ERS") (Bankruptcy Case No. I7-BK-3566(LTS)) (Last Four Digits of Federal Tax ID: 9686), (iii) 

Puerto Rico Highways and Transportation Authority ("HTA") (Bankruptcy Case No. I7-BK-3567 (LTS)) (Last Four 

Digits of Federal Tax ID: 3808), (iv) Puerto Rico Sales Tax Financing Corporation “COFINA”) (Bankruptcy Case 

No. I7-BK-3284 (LTS)) (Last Four Digits of Federal Tax ID: 8474); and (v) Puerto Rico Electric Power Authority 

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

Case:17-03283-LTS Doc#:2330 Filed:02/01/18 Entered:02/01/18 17:26:19 Desc: Main

Document Page 1 of 5
2 

7294871.3 

(C) MODIFYING THE AUTOMATIC STAY, (D) SCHEDULING A FINAL HEARING, 

AND (E) GRANTING RELATED RELIEF 

TO THE HONORABLE LAURA TAYLOR SWAIN, 

UNITED STATES DISTRICT JUDGE: 

1. Arc American, Inc. (“Arc”), by and through its undersigned attorneys, 

respectfully submit this objection (the “Scope Objection”) to the Urgent Motion Of The 

Financial Oversight And Management Board For Puerto Rico For Entry Of Order Clarifying 

Scope Of Interim Hearing On Urgent Joint Motion Of The Financial Oversight And 

Management Board For Puerto Rico And The Puerto Rico Fiscal Agency And Financial 

Advisory Authority For Entry Of Interim And Final Orders (A) Authorizing Postpetition Secured 

Financing, (B) Granting Priming Liens And Providing Superpriority Administrative Expense 

Claims, (C) Modifying The Automatic Stay, (D) Scheduling A Final Hearing, And (E) Granting 

Related Relief [ECF No. 557] (the “Scope Motion”)2

 dated January 31, 2018. 

2. The Scope Motion filed by the Oversight Board seeks the entry of an order 

limiting the scope of issues to be raised by creditors of PREPA and addressed by the Court at the 

interim hearing scheduled for February 7, 2018 (the “Interim Hearing”) on the Urgent Joint 

Motion Of The Financial Oversight And Management Board For Puerto Rico And The Puerto 

Rico Fiscal Agency And Financial Advisory Authority For Entry Of Interim And Final Orders 

(A) Authorizing Postpetition Secured Financing, (B) Granting Priming Liens And Providing 

Superpriority Administrative Expense Claims, (C) Modifying The Automatic Stay, (D) 

Scheduling A Final Hearing, And (E) Granting Related Relief [ECF No. 549] (the “Financing 

Motion”). 

1. Arc is an administrative expense creditor of PREPA as a result of having 

furnished, after the bankruptcy filing, subcontract work, labor, materials and services for the 

 

2

 Capitalized terms not otherwise defined herein shall have the same meaning as in the Scope Motion. 

Case:17-03283-LTS Doc#:2330 Filed:02/01/18 Entered:02/01/18 17:26:19 Desc: Main

Document Page 2 of 5
3 

7294871.3 

benefit of PREPA and the people of Puerto Rico in October and November 2017. Arc dispatched 

its emergency storm restoration resources to Puerto Rico, including crews and tools to the island, 

immediately following the destruction caused by Hurricane Maria. Specifically, Arc’s primary 

task in the restoration effort, was the repair of critical transmission lines to the power grid. 

Notwithstanding Arc’s rapid and professional response, Arc remains unpaid in an amount close 

to $19 million for labor, materials and services furnished by Arc and costs incurred by Arc for 

the benefit of PREPA and the people of Puerto Rico in October and November 2017, after 

PREPA’s bankruptcy filing.

3. Arc has filed an objection to the Financing Motion (the “Financing Motion 

Objection”) contemporaneous with the Scope Objection. Arc hereby incorporates by reference 

the arguments made in its Financing Motion Objection. Arc respectfully submits that the Scope 

Motion is inappropriate and should be denied in its entirety at or before the Interim Hearing for 

the following reasons: 

4. First, by limiting the scope of the Interim Hearing as proposed by the Oversight 

Board, creditors of PREPA and the Court will be denied the opportunity to test whether the 

proposed $1.3 billion Facility complies with 11 U.S.C. 364(c), is fair, reasonable, and in the best 

interests of creditors, as required by law. In re Ames Dep't Stores, Inc., 115 B.R. 34, 37–40 

(Bankr.S.D.N.Y.1990)(“Acknowledging that Congress, in Chapter 11, delicately balanced the 

hope of debtors to reorganize and the expectations of creditors for payment, the courts have 

focused their attention on proposed terms that would tilt the conduct of the bankruptcy case; 

prejudice, at an early stage, the powers and rights that the Bankruptcy Code confers for the 

benefit of all creditors; or leverage the Chapter 11 process by preventing motions by partiesin-interest from being decided on their merits.”). See Ames Dep't Stores supra. (Emphasis 

Case:17-03283-LTS Doc#:2330 Filed:02/01/18 Entered:02/01/18 17:26:19 Desc: Main

Document Page 3 of 5
4 

7294871.3 

supplied)(citing In re Tenny Village Co., 104 B.R. 562, 567–70 (Bankr.D.N.H.1989); In re St. 

Mary Hospital, 86 B.R. 393, 551, 17 Bankr.Ct.Dec. 685 (Bankr.E.D.Pa.1988). 

5. Second, in its current form, the proposed Interim Order granting the Financing 

Motion is fundamentally unfair, unreasonable, and fails to meet the legal standard for Court 

approval because it favors one specific class of administrative expense creditors over others. 

Specifically, the Interim Order provides for payment of allowed fees, costs and expenses of 

professionals for the Debtor, Oversight Committee and Creditors’ Committee (i.e., the “CarveOut”), with no cap for professional fees already incurred and/or those to be incurred 

prospectively. By contrast, the Interim Order does not provide for payment of allowed fees, 

costs, and expenses incurred by post-petition subcontractors (such as Arc) for post-petition labor, 

materials and services already furnished for the benefit of PREPA and for the people of Puerto 

Rico. If the Court grants the Scope Motion, then Arc and similarly situated post-petition 

subcontractors will be denied a fair opportunity to be heard. 

6. Last, the Scope Motion, if granted, would limit the transparency required of this 

Title III proceeding. It would enable the Oversight Board to obtain approval of the Financing 

Motion without due process – a meaningful opportunity to be heard – afforded to all creditors 

and stakeholders of PREPA’s estate. 

7. For each of the reasons set forth above, as well as for each of the reasons stated in 

Arc’s objection to the Financing Motion, Arc respectfully requests that the Court deny the Scope 

Motion in its entirety and grant such other or further relief as may be appropriate. 

Dated: February 1, 2018 

 

 Respectfully submitted, 

 CHIESA SHAHINIAN & GIANTOMASI PC 

 By: /s/ Robert E. Nies 

Robert E. Nies (pro hac vice applicant) 

Case:17-03283-LTS Doc#:2330 Filed:02/01/18 Entered:02/01/18 17:26:19 Desc: Main

Document Page 4 of 5
5 

7294871.3 

George A. Spadoro (pro hac vice applicant) 

Marc R. Lepelstat (pro hac vice applicant) 

Michael R. Caruso (pro hac vice applicant) 

 One Boland Drive 

West Orange, New Jersey 07052 

Telephone: (973) 530-2012 

Facsimile: (973) 530-2022 

Email: rnies@csglaw.com

-and- 

 ANTONETTI MONTALVO & RAMIREZ COLL 

 

By: /s/Jose L. Ramirez-Coll 

Jose L. Ramirez-Coll 

P.O. Box 13128 

Telephone: (787) 977-0303 

Facsimile: (787) 977-0323

Email: jramirez@amrclaw.com

 Attorneys for Arc American, Inc.

Case:17-03283-LTS Doc#:2330 Filed:02/01/18 Entered:02/01/18 17:26:19 Desc: Main

Document Page 5 of 5