EXHIBIT 4 

Case:17-03283-LTS Doc#:24535-4 Filed:06/12/23 Entered:06/12/23 21:36:46 Desc:

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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 3, 2023

 10:00 a.m.

1 7

1 8 VIDEOTAPED DEPOSITION of DAVID SKEEL,

1 9 held at the offices of Kramer Levin

2 0 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

2 5 of New York.

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1 DAVID SKEEL

2 Q What's your understanding of

3 the basis upon which the number was

4 increased by $280 million?

5 A My understanding is the

6 basis was increased to incorporate a

7 settlement with National.

8 Q So, in other words, the

9 board was proposing that PREPA could

1 0 issue an additional $280 million worth of

1 1 bonds in order to finance the National

1 2 settlement?

1 3 A That is my understanding,

1 4 yes.

1 5 Q Between December when the

1 6 first plan of adjustment was issued and

1 7 February 9th, did the board or its

1 8 advisors come to a different view about

1 9 how much was affordable for PREPA?

2 0 A I don't remember. The

2 1 affordability analysis is continuously

2 2 being refined. But I don't remember

2 3 there being a new view.

2 4 Q Let me make sure the

2 5 record's clear on that.

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1 DAVID SKEEL

2 agreement, an RSA with bondholders and

3 monolines in 2018 and then 2019?

4 A Yes, I do.

5 Q And the oversight board

6 agreed to -- I'll just call it the RSA.

7 Will you understand what I

8 mean?

9 A Yes, what I call the 2019

1 0 RSA.

1 1 Q Yes.

1 2 The board agreed to the 2019

1 3 RSA; right?

1 4 A The board did agree.

1 5 Q And the ad hoc group of

1 6 bondholders were a party to that RSA?

1 7 A The ad hoc group were a

1 8 party, yes.

1 9 Q And other monolines?

2 0 A Other monolines, yes, were a

2 1 party.

2 2 Q Forgive me if I asked you

2 3 this.

2 4 But you personally agreed to

2 5 the terms of that RSA?

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1 DAVID SKEEL

2 A I personally did agree.

3 Q Did you believe at the time,

4 that agreement was in PREPA's best

5 interest?

6 A At the time, I believed it

7 was in PREPA's best interest.

8 Q And you believed that the

9 deal was affordable from the perspective

1 0 of PREPA and its rate payers?

1 1 A At the time we signed it, I

1 2 believed it was affordable.

1 3 Q Otherwise, you wouldn't have

1 4 agreed to it; right?

1 5 A Yes.

1 6 Q And you've said you are

1 7 driven by the requirements of PROMESA.

1 8 Did you consider that the

1 9 2019 RSA was consistent with the

2 0 requirements of PROMESA?

2 1 A When we entered into the

2 2 requirements of PROMESA, I believed the

2 3 2019 RSA was consistent with them.

2 4 Q The term sheet for that RSA

2 5 provided for an exchange ratio between a

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1 DAVID SKEEL

2 predict fuel prices.

3 Q Did you think that inflation

4 in Puerto Rico was going to continue to

5 be a problem over the coming decades?

6 A I didn't have a particular

7 prediction about inflation.

8 Q And did you think that the

9 COVID-19 pandemic would persist over the

1 0 coming decades?

1 1 A I would have thought that at

1 2 some point, the pandemic would end.

1 3 Q You could put that aside.

1 4 The board has reached a PSA

1 5 with National; is that correct?

1 6 A That is correct.

1 7 Q What is National?

1 8 A National is a monoline

1 9 insurer.

2 0 Q Do you know from memory what

2 1 the terms of that settlement are in terms

2 2 of the exchange rate?

2 3 A I know the basic terms, yes.

2 4 Q I'll represent to you that

2 5 the exchange ratio is 71.65 percent.

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1 DAVID SKEEL

2 Does that sound correct to

3 you?

4 A That is correct.

5 Q And then there's some

6 additional fees that are called for to be

7 paid to National; right?

8 A That is correct.

9 Q Did you approve that

1 0 settlement?

1 1 A I initially voted against

1 2 it. And then I later approved it.

1 3 Q What changed your mind?

1 4 A What changed my mind was

1 5 that when considering the benefits of

1 6 that settlement and weighing it against

1 7 the burden of the settlement and the

1 8 risks created by the settlement, the

1 9 board as a whole had concluded that it

2 0 was a good settlement. And I came to

2 1 agree with the board as a whole.

2 2 Q Why did you initially vote

2 3 against it?

2 4 A Initially, I weighed those

2 5 same costs and benefits of the

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1 DAVID SKEEL

2 settlement, put them together and

3 concluded that the costs were a little

4 bit greater than the benefits.

5 Q Would you agree with me that

6 pursuant to the plan of adjustment, the

7 non-settling bondholders under all

8 scenarios recover less than

9 71.65 percent?

1 0 A That is not accurate.

1 1 Q What is inaccurate about it?

1 2 A It's inaccurate -- well,

1 3 actually, let me correct that. The

1 4 settling bondholders can recover more

1 5 than the non-settling bondholders cannot.

1 6 I stand corrected.

1 7 Q And the non-settling

1 8 bondholders, when I say under all

1 9 scenarios, I mean litigation scenarios

2 0 and other scenarios identified in the

2 1 plan of adjustment.

2 2 Under all scenarios, the

2 3 non-settling bondholders recover less

2 4 than 71.65 percent; right?

2 5 A On all the scenarios that

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1 DAVID SKEEL

2 are included in the current plan of

3 adjustment, yes, the non-settling

4 bondholders recover, yes.

5 And I'll just add one

6 qualification to that. I think it's

7 accurate, your statement is accurate.

8 But if the non-settling bondholders

9 vote -- if the class votes yes, they're

1 0 entitled to the CVI in the plan. So you

1 1 would have to figure out what the CVI

1 2 gives. But I think you're correct, that

1 3 it ends up -- under plausible

1 4 possibilities, I think it ends up being

1 5 less.

1 6 Q And the same is true for the

1 7 other monolines; Assured, for example,

1 8 under the plan obtains less than

1 9 71.65 percent?

2 0 A That is correct.

2 1 Q And the difference is not

2 2 trivial; it's a material difference,

2 3 isn't it?

2 4 MR. FIRESTEIN: Objection,

2 5 vague.

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1 DAVID SKEEL

2 A The difference between what

3 National recovers under the plan as it's

4 currently written and what the

5 non-settling bondholders and monolines

6 recover is meaningful. Again, it would

7 depend on what the CVI possibility is.

8 Q In the 2019 RSA that we

9 looked at, the other monolines, besides

1 0 National and the ad hoc group, the

1 1 bondholders all got the same exchange

1 2 rate; right?

1 3 A I believe that is correct.

1 4 Q Is it your view as a board

1 5 member that National's different

1 6 treatment from other bondholders and

1 7 monolines is necessary to PREPA's

1 8 reorganization?

1 9 A I don't know whether -- I

2 0 would say necessary because that involves

2 1 speculation about different possibilities

2 2 for reorganization. What I will say is,

2 3 it is an important piece of what we think

2 4 is a confirmable plan of adjustment.

2 5 Q Why do you say that?

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1 DAVID SKEEL

2 structure of the settlement.

3 Q What was the benefit -- what

4 were the benefits that you believe that

5 the board and PREPA would have gotten by

6 entering into that settlement?

7 A The benefits were that they

8 compromised their claim at less than 100

9 cents on the dollar. And we thought it

1 0 was a pretty strong claim. They are a

1 1 sizable claim that is now supportive of

1 2 the plan and will vote in favor of the

1 3 plan of adjustment and will not object to

1 4 the plan of adjustment. And all of those

1 5 were attractive benefits.

1 6 Q And can you identify what in

1 7 particular swayed the board to accept an

1 8 84 percent recovery rate?

1 9 MR. FIRESTEIN: I think the

2 0 form of your question seeks

2 1 deliberative process. I'll instruct

2 2 the witness not to answer. He's

2 3 already told you what his

2 4 understanding was of it. You can

2 5 reframe, if you wish.

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1 DAVID SKEEL

2 Syncora's contractual relationship with

3 PREPA?

4 A No, I have not.

5 Q Have you ever looked at

6 National's contractual relationship with

7 PREPA?

8 A No. I don't believe I have,

9 no.

1 0 Q Do you have any basis to

1 1 say, one way or the other, whether

1 2 Syncora's rights with respect to PREPA

1 3 are any different than National's rights

1 4 with respect to PREPA?

1 5 A I don't have a basis, no.

1 6 Q Your emphasis on the word I

1 7 makes me think someone else might have a

1 8 basis.

1 9 Do you know who that person

2 0 might be?

2 1 A Our lawyers may have a

2 2 basis. I just don't know.

2 3 Q But you don't yourself?

2 4 A Sitting here today, no, I

2 5 don't.

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1 DAVID SKEEL

2 entitlement to recovery on account of its

3 claims, which are unsecured, other than

4 the approximately $17 million in the

5 sinking fund?

6 MR. FIRESTEIN: It's an

7 incomplete hypothetical.

8 MR. BASSETT: I'll strike

9 the question. I'll rephrase it.

1 0 Q So assuming that the

1 1 National -- assuming that the summary

1 2 judgment decision is not overturned on

1 3 appeal, then National only has a secured

1 4 claim to the extent of the moneys in the

1 5 sinking fund; correct?

1 6 A That is correct.

1 7 Q Aside from that secured

1 8 claim, on account of whatever unsecured

1 9 claim National ends up having against

2 0 PREPA, would National have any greater

2 1 legal entitlement to recovery than other

2 2 general unsecured creditors?

2 3 MR. FIRESTEIN: Calls for a

2 4 legal conclusion, lacks foundation.

2 5 You can answer if you understand.

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1 DAVID SKEEL

2 A National's deficiency claim

3 would be an unsecured claim with the same

4 status as general unsecured claims.

5 Q So other than the likelihood

6 of that decision being overturned on

7 appeal, can you think of any reason why

8 National's claim is different than

9 general unsecured claims for purposes of

1 0 the 1129(b)1 analysis we talked about

1 1 earlier?

1 2 A Subject to the same

1 3 qualifications. If we're talking about

1 4 just not the secured portion, we're

1 5 talking about the deficiency claim, it

1 6 does seem to me that it has the same

1 7 stature as a general unsecured claim or

1 8 would.

1 9 Q And it's also possible that

2 0 an appeal or -- you understand that it's

2 1 possible that the district court will

2 2 decide that bondholders have an unsecured

2 3 deficiency claim much lower than

2 4 $8.5 billion?

2 5 A I understand that that is

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