IN THE 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

No. 17 BK 3283-LTS

(Jointly Administered)

Re: ECF No. 23269

NORTH SIGHT COMMUNICATIONS, INC.,

Movant,

 -againstTHE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of

THE COMMONWEALTH OF PUERTO RICO, et al.,

Respondents.

OBJECTION OF THE COMMONWEALTH OF

PUERTO RICO TO NORTH SIGHT COMMUNICATIONS, INC.’S MOTION

FOR ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM

1

 The Debtors in these Title III cases, along with each Debtor’s respective Title III Case number and the last four 

(4) digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto 

Rico (the “Commonwealth”) (Bankruptcy Case No. 17 BK 3283-LTS) (Last Four Digits of Federal Tax ID: 3481); 

(ii) Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284-LTS) (Last 

Four Digits of Federal Tax ID: 8474); (iii) Puerto Rico Highways and Transportation Authority (“HTA”) 

(Bankruptcy Case No. 17 BK 3567-LTS) (Last Four Digits of Federal Tax ID: 3808); (iv) Employees Retirement 

System of the Government of the Commonwealth of Puerto Rico (“ERS”) (Bankruptcy Case No. 17 BK 3566-

LTS) (Last Four Digits of Federal Tax ID: 9686); (v) Puerto Rico Electric Power Authority (“PREPA”) 

(Bankruptcy Case No. 17 BK 4780-LTS) (Last Four Digits of Federal Tax ID: 3747); and (vi) Puerto Rico Public 

Buildings Authority (“PBA”) (Bankruptcy Case No. 19 BK 5523-LTS) (Last Four Digits of Federal Tax ID: 3801) 

(Title III case numbers are listed as bankruptcy case numbers due to software limitations).

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To the Honorable United States District Court Judge Laura Taylor Swain:

The Commonwealth of Puerto Rico (the “Commonwealth” or the “Debtor”), by and 

through the Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), 

as the Debtor’s sole Title III representative pursuant to Section 315(b) of the Puerto Rico 

Oversight, Management, and Economic Stability Act (“PROMESA”),2respectfully submits this 

objection (the “Objection”) to North Sight Communications, Inc.’s Motion for Allowance and 

Payment of Post-petition Administrative Expense Claim [Case No. 17-3283, ECF No. 23269]3(the 

“Motion”), filed by North Sight Communications, Inc. (“Movant”). In support of the Objection, 

the Debtor respectfully represents:

PRELIMINARY STATEMENT

1. Movant asserts it is entitled to administrative expense priority for an asserted 

litigation claim arising after the commencement of the Debtor’s Title III case. Movant’s sole 

contention to support its claim to administrative expense priority is that the asserted claim arose 

post-petition. The Motion should be denied because (i) the asserted claim is contingent at this 

time, and should instead be resolved pursuant to the claims resolution process and pursuant to the 

timeline established in the Debtor’s Title III case, the Plan, and the Confirmation Order (each as 

defined below), and (ii) Movant has failed to articulate a reason its asserted claim satisfies the 

requirements for administrative expense priority treatment.

BACKGROUND

2. On May 3, 2017, the Commonwealth filed a petition pursuant to Title III of 

PROMESA to commence its Title III case. 

2

 PROMESA has been codified at 48 U.S.C. §§ 2101–2241. 

3 Unless otherwise stated, all ECF Nos. shall refer to the docket in Case No. 17-3283.

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3. On October 9, 2020, Movant filed an action, captioned North Sight 

Communications, Inc. v. Department of Public Safety, et al., Case No. SJ2020CV05478 (the

“Postpetition Action”), in the Court of First Instance in the San Juan Superior Court (the 

“Commonwealth Court”) against the Department of Public Safety, the General Services

Administration, the Puerto Rico Police Bureau, and certain other parties, relating to the alleged 

purchase of portable radios, requesting, among other things, the Commonwealth Court order the 

parties to purchase certain portable radios. The Postpetition Action remains pending in the 

Commonwealth Court.

4. On January 18, 2022, the Court entered the Order and Judgment Confirming 

Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, 

the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and 

the Puerto Rico Public Buildings Authority [ECF No. 19813] (the “Confirmation Order”), 

confirming the Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth 

of Puerto Rico, et al., [ECF No 19784] (as amended, supplemented, or modified, the “Plan”).4

Section 92.2 of the Plan discharged and released the Debtor from “any and all Claims, Causes of 

Action, and any other debts that arose, in whole or in part, prior to the Effective Date.” Plan § 

92.2(a). 

5. On March 15, 2022, the Plan was substantially consummated [ECF No. 20349]. 

Beginning on the Effective Date, the Confirmation Order permanently enjoined parties from 

“commencing or continuing, directly or indirectly . . . any action or other proceeding (including, 

without limitation, any judicial, arbitral, administrative, or other proceeding) of any kind” on any 

discharged Claims against the Debtor (the “Discharge Injunction”). Confirmation Order ¶ 59. 

4 Unless otherwise defined herein, capitalized terms shall have the meanings ascribed thereto in the Plan. 

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6. Decretal paragraph 44 of the Confirmation Order provides that “[t]he last day to 

file proof of Administrative Expense Claims shall be ninety (90) days after the Effective Date, 

after which date, any Administrative Expense Claim, proof of which has not been filed, shall be 

deemed forever barred, and the Debtors and Reorganized Debtors shall have no obligations with 

respect thereto.” The deadline to file proofs of Administrative Expense Claims was June 13, 2022, 

which was extended to January 18, 2023, solely with respect to certain claims or causes of action, 

pursuant to the Order Extending Administrative Claim Bar Date for Certain Parties and Modifying 

Discharge Injunction [ECF No. 22650]. Section 82.1 of the Plan provides that the Oversight Board 

“shall file and serve all objection to Claims as soon as practicable, but, in each instance, not later 

than one hundred eighty (180) days following the Effective Date or such later date as may be 

approved by the Title III Court.” The deadline for the Debtor to object to Claims was September 

11, 2022, which was extended to September 4, 2023 pursuant to the Order Granting Debtors’ 

Motion for an Order Further Extending the Deadline to File Objections to Proofs of Claim [ECF 

No. 23476] (the “Extension Order”).

7. On January 18, 2023, Movant filed the Motion, seeking allowance of an 

administrative expense claim of no less than $1,497,500.00 or, in the alternative, $422,500.00 (the 

“NSCI Claim”).

5

ARGUMENT

I. The Motion Does Not Establish Entitlement to Allowance for the Asserted Claim

8. Parties seeking administrative priority status for their claims must establish liability 

under applicable law. See Grogan v. Garner, 498 U.S. 279, 283 (1991) (“The validity of a 

5 NSCI has not filed a proof of Administrative Expense Claim. However, the Oversight Board will treat the Motion 

as a timely filed proof of Administrative Expense Claim. The Commonwealth reserves all rights, defenses, 

objections, and arguments in connection with such proof of Administrative Expense Claim.

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creditor’s claim is determined by rules of state law”); In re Bos. Reg’l Med. Ctr., 256 B.R. 212, 

220 (Bankr. D. Mass. 2000), aff’d sub nom. Mass. Div. of Emp. & Training v. Bos. Reg’l Med. 

Ctr., Inc. (In re Bos. Reg’l Med. Ctr., Inc.), 265 B.R. 838 (B.A.P. 1st Cir. 2001), aff’d on other 

grounds, 291 F.3d 111 (1st Cir. 2002) (“In determining whether an obligation arising under state 

law is a tax under the Bankruptcy Code, courts must look to state law to understand the 

characteristics and incidents of the obligation . . . .”); see also In re Fin. Oversight & Mgmt. Bd. 

for P.R., No. 17-bk-4780, 2022 WL 1401506, at *4 (D.P.R. May 4, 2022) (“Motion for 

administrative expense treatment fails because [movant] has not demonstrated that it has a 

contractual right to reimbursement of the Expenses . . . .”); September 28, 2022 Hr’g Tr. 118:20-

22 (“The Court’s discretion is broad, but it still falls to the claimant to establish the liability of the 

[D]ebtor under applicable law.”). To the extent they are not, the asserted costs do not constitute 

“actual, necessary costs and expenses of preserving” the Commonwealth. 11 U.S.C. § 

503(b)(1)(A)(i).

9. “The burden of proving entitlement to priority payment as an administrative 

expense . . . rests with the party requesting it,’ and the Court has broad discretion in determining 

whether to grant a request for such priority treatment.” In re Fin. Oversight & Mgmt. Bd. for P.R., 

631 B.R. 596, 604 (D.P.R. 2021) (quoting Woburn Assocs. v. Kahn (In re Hemingway Transp., 

Inc.), 954 F.2d 1, 5 (1st Cir. 1992)); see also In re Jeans.com, 491 B.R. 16, 23 (Bankr. D.P.R. 

2013). A party seeking administrative expense treatment must show a “clear relationship between 

the expenditures made and the benefit conferred on the estate . . . .” In re Drexel Burnham Lambert 

Grp., 134 B.R. 482, 489 (Bankr. S.D.N.Y. 1991) (citations omitted).

10. Here, Movant has not met the burden of proving entitlement to administrative 

expense status. Movant’s sole reason for administrative expense priority treatment of its asserted 

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claim is that the claim arose post-petition. Mot. ¶ 7. Such barebones assertion fall well short of 

Movant’s burden.

11. A claim does not constitute an administrative expense simply because it accrued 

post-petition, the expense must also provide a benefit to the estate. See In re Drexel Burnham 

Lambert Grp., 134 B.R. at 489. Movant makes no attempt to satisfy this part of the test. Due to 

infirmities in the procurement process rendering any obligation of the government to purchase the 

radios null and void pursuant to Commonwealth law, among other things, which is the subject to 

the Postpetition Action, the General Services Administration and the Puerto Rico Police Bureau

have not accepted delivery of any portable radios. 

12. Further, Movant ignores the contingent nature of the NSCI Claim. The Postpetition 

Action remains pending in the Commonwealth Court, meaning liability has not been established 

on the Debtor’s part. Movant therefore does not hold a liquidated claim from which it can seek 

recovery. Put simply, before Movant can recover from the Debtor, Movant must first establish 

liability. 

II. The Motion Attempts to Circumvent the Process for Resolving Claims Established 

Pursuant to the Plan

13. The Motion constitutes an attempt to circumvent the process established in Section 

82.1 of the Plan for resolving disputed Claims. As explained above, the Oversight Board has until 

September 4, 2023 to object to Claims pursuant to the Extension Order. The Board requires this 

time to review filed Claims and determine the most effective path forward to resolve asserted

Claims—which may, for example, include liquidating a Claim through the alternative dispute 

resolution process established in these Title III Cases or in its original forum. Movant seeks, in 

contravention of the Plan, to short-circuit this process and require the Board to resolve the NSCI 

Claim prematurely, while other similarly situated claimants proceed through the claims resolution 

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process established in this Title III case. As a result, the Motion should be denied so as to allow 

the Debtor and the Oversight Board to follow the procedures established pursuant to the Plan for 

resolving Claims.

WHEREFORE the Debtor respectfully requests the Court deny the Motion and grant it 

such other further relief as is just. 

Dated: April 7, 2023

San Juan, Puerto Rico

Respectfully submitted, 

/s/ Brian S. Rosen

Martin J. Bienenstock (pro hac vice) 

Brian S. Rosen (pro hac vice) 

PROSKAUER ROSE LLP 

Eleven Times Square 

New York, NY 10036 

Tel: (212) 969-3000 

Fax: (212) 969-2900 

Attorneys for the Financial Oversight and 

Management Board as representative for the 

Debtor 

/s/ Hermann D. Bauer 

Hermann D. Bauer

USDC No. 215205

O’NEILL & BORGES LLC

250 Muñoz Rivera Ave., Suite 800

San Juan, PR 00918-1813

Tel: (787) 764-8181

Fax: (787) 753-8944

Co-Attorney for the Financial Oversight and 

Management Board as representative for the 

Debtor 

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