Natbony Declaration Exhibit 1 

 

Case:17-03283-LTS Doc#:24541-1 Filed:06/12/23 Entered:06/12/23 22:44:57 Desc:

Exhibit 1 - Skeel Dep Tr Page 1 of 14
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 A Why do I say it's an

3 important piece?

4 Q Yes.

5 A Because National is one of

6 the largest creditors. All told, they're

7 owed about a billion dollars when you

8 consider all of their claims. And as a

9 result of this settlement, they are

1 0 agreeing to give up their -- they've

1 1 agreed to give up their claims, that they

1 2 were fully secured, that they were

1 3 entitled to not just 100 cents on the

1 4 dollar, but 100 cents plus accrued

1 5 interest. They agreed to give all of

1 6 that up. And they agreed to take

1 7 significantly less. They agreed to

1 8 support the plan. They agreed to vote in

1 9 favor of the plan, all of which are very

2 0 attractive benefits to us.

2 1 Q Is the reorganization

2 2 contemplated by the plan unworkable in

2 3 the absence of the National settlement?

2 4 MR. FIRESTEIN: Objection,

2 5 vague.

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1 DAVID SKEEL

2 Q So will you understand who

3 I'm referring to when I say the fuel line

4 lenders?

5 A Yes, I will.

6 Q So with respect to the fuel

7 line lenders, what understanding do you

8 have as to the role of the fuel line

9 lenders in PREPA's current day-to-day

1 0 operations?

1 1 A My understanding is they do

1 2 not currently have a role in operations.

1 3 Q Do you know whether PREPA

1 4 ever purchased fuel or any other goods

1 5 directly from the fuel lines?

1 6 A I don't know for sure.

1 7 Q But they're lenders; right?

1 8 A The original fuel line

1 9 lenders were lenders, yes.

2 0 Q And they were providing

2 1 financing to buy fuel; correct?

2 2 A I believe that is correct.

2 3 Q Do you know whether PREPA

2 4 borrowed money from any other lenders to

2 5 buy goods and services?

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1 DAVID SKEEL

2 Q But after the initial loans,

3 are you aware of any additional loans

4 that PREPA received from the fuel line

5 lenders?

6 A Not that I'm aware of.

7 Q So, for instance, are you

8 aware of any financing that PREPA

9 received from the fuel line lenders in

1 0 the last five years?

1 1 A Not that I'm aware of, no.

1 2 Q Have there been any

1 3 discussions that you're aware of about

1 4 the fuel line lenders providing funds to

1 5 PREPA from 2020 to the present?

1 6 A Not that I'm aware of, no.

1 7 Q Are you aware of any

1 8 discussions with the fuel line lenders

1 9 about them providing any financing to

2 0 PREPA in 2023?

2 1 A Not that I am aware of, no.

2 2 Q And what about beyond 2023?

2 3 A We're still in 2023.

2 4 Q Beyond 2023, have there been

2 5 any discussions -- I'm sorry. After

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1 DAVID SKEEL

2 2023?

3 A Could you state the whole

4 question --

5 Q I'll state the whole

6 question. And my apologies. I don't

7 mean to interrupt you. And we should

8 both let each other finish.

9 Are you aware of any

1 0 discussions with the fuel line lenders

1 1 about PREPA borrowing funds after 2023?

1 2 A No, I am not.

1 3 Q Are you familiar with the

1 4 fuel line lenders' current plan support

1 5 agreement?

1 6 A Yes, I am.

1 7 Q Did you participate at all

1 8 in negotiating the fuel line lenders'

1 9 plan support agreement?

2 0 MR. FIRESTEIN: Objection,

2 1 vague.

2 2 A I did not directly

2 3 negotiate, no.

2 4 Q When you say you didn't

2 5 directly negotiate, what role did you

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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 Q With respect to you as a

3 voter on the -- let's start with this.

4 The board did vote and

5 approve the PSA for the fuel line

6 lenders; correct?

7 A Yes. The board did.

8 Q And in your view, what

9 argument presented by the fuel line

1 0 lenders in particular swayed you to

1 1 approve the PSA?

1 2 A I don't know that there was

1 3 a single argument that swayed me to vote

1 4 yes. I will say that they had and have a

1 5 couple fairly strong arguments for

1 6 current expense treatment that other

1 7 creditors didn't have. One of those

1 8 arguments is that they are specifically

1 9 mentioned in the trust indenture.

2 0 Another is that they claimed

2 1 that there are more than one contract

2 2 with PREPA where PREPA said that they are

2 3 current expense claimants. And we oppose

2 4 those arguments. And we took litigation

2 5 positions against those arguments. But

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1 DAVID SKEEL

2 agreement to vote yes, their agreement

3 not to object to the plan, all of which

4 are helpful to moving towards a

5 confirmable plan of adjustment.

6 Q Would paying the fuel line

7 lenders a 50-cent recovery be more

8 affordable than what they're receiving

9 under the plan?

1 0 A Every dollar less that you

1 1 pay is a dollar more attractive and more

1 2 affordable, yes.

1 3 Q Are you aware of after

1 4 the -- of whether after the initial

1 5 financing from the fuel line lenders,

1 6 they ever provided PREPA with any bridge

1 7 financing or short-term financing or any

1 8 other additional financing?

1 9 A I do not know.

2 0 Q But sitting here today,

2 1 you're not aware of any; correct?

2 2 A Sitting here today, I don't

2 3 recall additional funding, financing that

2 4 they provided.

2 5 Q Are you aware of the

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Exhibit 1 - Skeel Dep Tr Page 9 of 14
1 DAVID SKEEL

2 existence of any intercreditor agreements

3 between the fuel line lenders and the

4 bondholders?

5 A I don't remember

6 intercreditor agreements, no.

7 Q Now, you testified earlier

8 that the board had made some arguments

9 against the fuel line lenders' positions

1 0 with respect to their claims. Do you

1 1 remember testifying to that?

1 2 A I do remember, yes.

1 3 MR. NATBONY: Can we bring

1 4 up tab 10?

1 5 (The above-referred-to

1 6 document was marked as Exhibit 20 for

1 7 identification, as of this date.)

1 8 Q Have you seen this document

1 9 before?

2 0 A I'm trying to figure out

2 1 what it is.

2 2 Q Is it a memorandum --

2 3 MR. FIRESTEIN: Hold on one

2 4 second.

2 5 Q Finish your answer.

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1 DAVID SKEEL

2 top of the next page?

3 A Yes.

4 Q And then if you go on,

5 you'll see a couple of lines down,

6 there's a reference to

7 Citibank/Scotiabank lenders. Do you

8 understand that?

9 A Yes, I do.

1 0 Q Do you understand that to be

1 1 the fuel line lenders?

1 2 A I do, yes.

1 3 Q And then in the next

1 4 notwithstanding clause, you'll see

1 5 another reference to Citibank, Scotiabank

1 6 lenders. You see that?

1 7 A Yes, I do.

1 8 Q There's another

1 9 notwithstanding sentence after that. And

2 0 you'll see a reference to them after

2 1 that. Do you see that?

2 2 A Yes, I do.

2 3 Q When you said that you

2 4 thought that they had a strong argument

2 5 based on them being mentioned in the

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1 DAVID SKEEL

2 trust agreement, is this what you're

3 referring to?

4 A I'm not sure. As I said

5 earlier, I'm not familiar with the

6 specific provisions of the trust

7 agreement.

8 Q So you personally don't have

9 any understanding as to whether this

1 0 argument is a strong argument; right?

1 1 A My understanding is based on

1 2 our conversations with our lawyers.

1 3 Q I'd like to ask you some

1 4 additional questions about the National

1 5 settlement that we talked about

1 6 previously.

1 7 I don't think I asked you

1 8 these questions about both settlements

1 9 earlier when I was asking you about

2 0 communications you may have had with

2 1 others about the National settlement. I

2 2 was asking you those questions about the

2 3 fuel line lender settlement, but I'm now

2 4 going to ask about the National

2 5 settlement.

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1 DAVID SKEEL

2 completely secured. And they were

3 entitled to 100 cents on the dollar, plus

4 post-petition interest for the duration

5 of the case. And in return for the

6 settlement, they compromised that

7 argument and agreed to take the

8 71.65 percent.

9 And the other components of

1 0 the deal, they agreed to support the plan

1 1 to vote in favor of the plan. And by

1 2 reaching the deal with them, we took

1 3 roughly a billion dollars off the table.

1 4 So it was a very attractive settlement.

1 5 Q The settlement with National

1 6 was reached the end of January,

1 7 approximately, of this year; is that

1 8 right?

1 9 A I don't remember exactly

2 0 when it was. But it was sometime around

2 1 then.

2 2 Q And then sometime after

2 3 that, the court issued its summary

2 4 judgment decision in the lien challenge

2 5 litigation?

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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

6 Reporter and a Notary Public, do hereby

7 certify that the foregoing witness, DAVID

8 SKEEL, was duly sworn on the date

9 indicated, and that the foregoing, to the

1 0 best of my ability, is a true and accurate

1 1 transcription of my stenographic notes.

1 2 I further certify that I am not

1 3 employed by nor related to any party to

1 4 this action.

1 5

1 6

1 7 <%5259,Signature%>

 ____________________

1 8 ANTHONY GIARRO

1 9

2 0

2 1

2 2

2 3

2 4

2 5

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