UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

GOVERNMENT OF PUERTO RICO EX REL.

FRANCISCO PUJOL MENESES

HAROLD D. VICENTE GONZÁLEZ,

Plaintiff,

v.

UBS BANK, USA AND

UBS FINANCIAL SERVICES INC.,

Defendants.

Case No. ___________

NOTICE OF REMOVAL

TO THE CLERK OF THE COURT:

PLEASE TAKE NOTICE that Defendants UBS Bank, USA and UBS Financial

Services Inc. (collectively, UBS

pursuant to 48 U.S.C. § 2166(d)(1), removing the action Qui Tam Action commenced

against them by Plaintiff Government of Puerto Rico ex rel. Francisco Pujol Meneses and Harold

D. Vicente Relators , from the Commonwealth Court of Puerto Rico, Court of

First Instance, San Juan Part Court of First Instance

for the District of Puerto Rico. This Court has original jurisdiction over this action pursuant to

48 U.S.C. § 2166(a)(2) (PROMESA jurisdiction). Pursuant to 48 U.S.C. § 2166(d)(3) and Local

Rule 3A of the United States District Court for the District of Puerto Rico, this case should be

transferred to the Honorable Laura Taylor Swain as a proceeding related to In re Commonwealth

of Puerto Rico, No. 17-bk-03283 (D.P.R.).

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I N T R O D U C T I O N A N D S U M M A R Y O F G R O U N D S F O R R E M O V A L

1. The unprecedented default of the Commonwealth and various Puerto Rico issuers

and municipal entities on billions in government-issued debt contributed to a severe financial

crisis in Puerto Rico, and drove Congress to enact the 2016 Puerto Rico Oversight, Management,

and Economic Stability Act, 48 U.S.C. § 2101 et seq. PROMESA , which established the

Financial Oversight and Management Board (the Oversight Board for Puerto Rico, created a

bankruptcy- Title III provided other

relief. The Commonwealth, along with several other Puerto Rico entities, commenced

insolvency proceedings under Title III Title III Cases . On January 14, 2022, the

Commonwealth filed its 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

Plan Plan ). In re Commonwealth of Puerto Rico, No. 17-bk-3283 (D.P.R. January 14,

2022), Dkt. No. 19784.1 On January 18, 2022, Judge Swain entered an order confirming the

Confirmation Order

2. In this litigation, the Relators seek to recover income taxes and licensing fees

arising from certain of

pay to the Commonwealth.

3. UBS intends to move to dismiss at the appropriate time, as the Complaint has

several fundamental legal defects. To start, though, this dispute which concerns tax revenue

that is a central component of the Commonwealth Plan and the rights of the Commonwealth and

its creditors thereunder should proceed in federal court, and particularly before this Court.

1 No.

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4. Federal jurisdiction exists because this action is, at the very least, related to the

Title III Cases, especially the Title III Case of the Commonwealth. See 48 U.S.C. § 2166(a)(2).

It not only asserts claims that are property of the Commonwealth and that could affect

distributions under the Commonwealth Plan, but also it raises substantial issues regarding the

proper interpretation and implementation of that Plan. First, the Commonwealth Plan vested all

ed for, including the causes of action at

issue here and any recovery therefrom, in the reorganized Commonwealth, depriving (or at a

minimum calling into question) the Relators ability to assert these causes of action. Second, the

Commonwealth Plan provides for to be pledged as collateral

for the new bond issuances distributed to creditors, and the Relators threaten to impermissibly

deplete that collateral by seeking a percentage of any recovery under Law 154. At least these

issues, and possibly others, will require interpretation of the Commonwealth Plan and

Confirmation Order, and by attempting to litigate claims that belong to the Commonwealth, the

Relators are interfering with the administration of the Commonwealth Plan and the

B A C K G R O U N D A N D P A R T I E S

5. The Relators are natural persons who purport to bring the underlying action on

behalf of the Government of Puerto Rico as plaintiffs under 32 L.P.R.A. §§ 2931 et seq., Puerto

Law 154 See Certified Translated Complaint ¶ 1.1, attached to this

Compl.

6. BUSA

State of Utah. UBS Financial Services Inc. is organized under the laws of the State of Delaware

and is the successor in interest to UBS Financial Services Incorporated of Puerto Rico UBSPR .

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7. The Relators allege that from approximately 2003 to 2013, UBS issued thousands

of loans and provided other banking services to residents of Puerto Rico without necessary

licenses, see Compl. ¶ 5.10, and that UBS failed to pay income taxes it owed on the interest

earned from its loans, see id. ¶ 5.11. The Relators assert causes of action for (i) unpaid income

tax of at least $48.5 million, plus penalties, surcharges and interest, subject to trebling, id. ¶ 6.2;

and (ii) unpaid municipal license fees of at least $1.5 million, plus penalties, surcharges and

interest, subject to trebling, id. ¶ 6.5. The Commonwealth itself has not seen fit to bring any of

these claims.

8. public debt crisis, Congress passed PROMESA to

stabilize the territory and provide a sorely needed process for the adjustment of debts. On June

30, 2016, President Obama signed PROMESA into law. PROMESA sets forth

explicit finding that , and

structural problems ... is necessary, involving independent oversight and a Federal statutory

authority for the Government of Puerto Rico to restructu

48 U.S.C. § 2194(m)(4).

9. The enactment of PROMESA operated as an automatic stay of any enforcement

and debt-collection activities against Puerto Rico and its agencies. See 48 U.S.C. § 2194(b).

Shortly after that stay expired, the Commonwealth filed for relief under Title III of PROMESA,

commencing its Title III proceedings on May 3, 2017. Pursuant to 48 U.S.C. § 2168, Chief

Justice Roberts designated U.S. District Judge Swain, of the Southern District of New York, to

preside over the Title III Cases. See Order of Designation, In re Commonwealth of Puerto Rico,

No. 17-bk-03283 (D.P.R. May 5, 2017), Dkt. No. 4.

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10. As discussed above, the Commonwealth filed the Commonwealth Plan on

January 14, 2022, and Judge Swain issued the Confirmation Order on January 18, 2022.

11. The Commonwealth Plan provides various forms of treatment to the

particular relevance here, it provides for (i) the distribution of

new fixed- GO Bonds the distribution of contingent value instruments that

yield payments if the Commonwealth generates certain amounts of sales and use tax (the

CVIs Pension Reserve Trust

certain restored pension benefits.

G R O U N D S F O R R E M O V A L

12. Removal of the Qui Tam Action to federal court, and to this Court in particular, is

proper because, at a minimum, this action is related to the Title III Cases under PROMESA.

See 48 U.S.C. § 2166(a)(2) (granting the district courts original jurisdiction over civil

id. § (d)(1) (providing for removal).

13. In the bankruptcy context, related-to jurisdiction exists whenever

[the] proceeding could conceivably have any effect on the estate being administered in

Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984). As Judge Swain recently

observed, the same test applies under PROMESA. In re Fin. Oversight and Mgt. Bd. for Puerto

Rico Commonwealth I Under that test, a

federal -to jurisdiction may narrow some after confirmation of a plan of

reorganization, but it by no means disappears. See id. at 349 n.12 (citing

Ctr., Inc., 410 F.3d 100, 106 (1st Cir. 2005)). Rather, even after confirmation of a plan, relatedto jurisdiction continues to a matter affects the interpretation, implementation,

consummation, execution, or administration of a confirmed plan or incorporated litigation trust

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agreement. Commonwealth I, 650 B.R. at 349 (quoting In re Enivid, Inc., 364 B.R. 139, 147

(Bankr. D. Mass. 2007)).

14. The Qui Tam because it not only has the

potential to affect distributions under the Commonwealth Plan (and, indeed, to interfere with the

require, from the

outset, judicial interpretation of the Plan to determine whether the Relators are even entitled to

assert the underlying claims.

15. Judge Swain has already found that she has post-confirmation related-to

jurisdiction where a question exists as to a plaint

apportioned under the Commonwealth Plan. In re Fin. Oversight and Mgt. Bd. for Puerto Rico

Commonwealth II Commonwealth II,

beneficiaries of the Employees Retirement System of the Government of the Commonwealth of

Puerto Rico ( ERS the ERS. UBS

argued that those claims had been assigned to a litigation trust under the Commonwealth Plan,

precluding the beneficiary plaintiffs from asserting them. Judge Swain found that because the

concern[ed] the

interpretation and enforcement of the Plan and the confirmation order stconfirmation related-to jurisdiction over the dispute. Id. at 329.

16. For the same reasons, this action is likewise related to the Title III Cases. The

outcome of the action could not only affect distributions under the Plan by increasing or reducing

the

and performance of the Plan by interfering with its own determination whether or not to pursue

the claims. Moreover, resolution of this action will require the presiding court to consider and

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interpret the Plan, as several provisions appear to preclude the Relators from

asserting the causes of action at issue. As a result, the proper construction of the Plan and the

effect it has under PROMESA will be threshold issues in the case.

17. First, the causes of action, and all proceeds therefrom, have been vested solely

with the reorganized Commonwealth under the terms of the Commonwealth Plan.

18. The Plan thus xcept as provided in the

Confirmation Order, on the Effective Date, title to all Assets and properties of the Debtors

encompassed by the Plan shall vest in Reorganized Debtors, free and clear of all Liens (except

the Liens granted pursuant to the Plan and Confirmation Order). Commonwealth Plan § 92.1.

19.

and the Confirmation Order as of the Effective Date and (ii) all Causes of Action,

and any subsequent proceeds thereof, that have been or may be commenced

by the Debtors or other authorized representative for the benefit of the Debtors

and its Creditors, unless modified or released pursuant to the Plan or a Final

Order, including, without limitation, any Avoidance Action.

Id. § 1.83 (emphasis added).

20.

All claims, actions, causes of action, rights to payment, choses in action, suits,

debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,

covenants, contracts, controversies, agreements, promises, variances, trespasses,

damages, judgments, remedies, rights of setoff, third-party claims, subrogation

claims, contribution claims, reimbursement claims, indemnity claims,

counterclaims, and cross claims (including, but not limited to, all claims for

breach of fiduciary duty, negligence, malpractice, breach of contract, aiding and

abetting, fraud, inducement, avoidance, recovery, subordination, and all

Avoidance Actions) that are pending or may be asserted against any Entity

whether arising on or before the Effective Date, based in law or equity,

including, but not limited to, under the Bankruptcy Code, whether known,

unknown, reduced to judgment, not reduced to judgment, liquidated,

unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,

secured or unsecured and whether asserted or assertable directly or

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derivatively, in law, equity or otherwise and whether asserted or unasserted

as of the Effective Date.

Id. § 1.126 (emphasis added).

21.

A Person, a corporation, a general partnership, a limited partnership, a limited

liability company, a limited liability partnership, an association, a joint stock

company, a joint venture, an estate, a trust, an unincorporated organization, a

governmental unit or any subdivision thereof, including, without limitation, the

office of the United States Trustee, or any other entity.

Id. § 1.216.

22. Taken together, these provisions make clear that the causes of action asserted in

the Qui Tam Action were

Commonwealth Plan. The claims arise from conduct alleged to have taken place from 2003 to

definition of Causes of Action under the Commonwealth Plan, and thus, Assets. As a gating

matter, then, this Court must determine whether the Plan precludes the Relators from asserting

the claims and, instead, the Commonwealth must itself bring the claims if it believes they claims

have any merit at all.

23. This distinction is not academic. The Relators have invoked a right to seek

between 25% and 30%

all

Causes of Action, and any subsequent proceeds thereof hus tacitly stated

their intention to extract value from assets that have been vested in the reorganized

Commonwealth, in contravention of the terms of the Commonwealth Plan.

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24. Second, the Plan also appears to bar the Relators from asserting the claims

because the causes of action are designated under the Plan as collateral for the GO Bonds and

CVIs.

25. The Commonwealth Plan provides, as a condition precedent to its going effective,

the Commonwealth shall have pledged its full faith, credit and taxing power under the

Commonwealth Constitution and applicable Puerto Rico law for the payment of principal and

interest on the New GO Bonds and payment on the CVIs

Indeed, the Confirmation Order includes a factual finding the Commonwealth has validly

pledged its full faith, credit and taxing power under the Commonwealth Constitution and

applicable Puerto Rico law for the payment of principal and interest with respect to the New GO

Bonds and payment with respect to the CVIs.

26. The Government of Puerto Rico,

including without limitation, any Entity or Person acting for or on behalf thereof, shall not enact

any statute, resolution, policy, or rule that would repeal, change, or negate any law currently

existing that authorizes debt issued pursuant to the Plan or any law pledging the full faith, credit,

and taxing power of the Commonwealth to secure debt issued pursuant to the Plan.

Confirmation Order ¶ 80.

27. The causes of action in the Qui Tam Action arise from allegedly unpaid income

taxes and government licensing fees, and thus appear to

As

such, the causes of action appear to have been pledged as collateral for the GO Bonds and CVIs,

such that the Relators are in violation of the terms of the Commonwealth Plan and Confirmation

Order by attempting to assert control over and impermissibly extract value from such collateral.

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28. The Relators will no doubt dispute this reading of the Plan. But the test for

jurisdiction

litigation raises threshold, gating issues as to whether the action is contrary to the binding terms

on of the Plan. That is

more than sufficient

T I M E L I N E S S

29. UBS was served with process no earlier than June 13, 2023. Accordingly, this

petition is timely. See 28 U.S.C. § 1446(b); Murphy Bros, Inc. v. Michetti Pipe Stringing, Inc.,

526 U.S. 344, 354 (1999).

N O W A I V E R

30. Nothing in this Notice of Removal should be interpreted as a waiver or

relinquishment of rights to assert any defenses or objections.

31. If any question arises as to the propriety of the removal of this action, UBS

requests the opportunity to brief any disputed issues and to present further evidence and oral

argument in support of its position that this case has been properly removed to this Court.

R E L A T E D C A S E S

32. As discussed above, this Qui Tam Action is related to the Title III Cases for

Puerto Rico (17-03283) (jointly administered under lead Case No. 17-03283).

O T H E R C O M P L I A N C E

33. Although removal based on 48 U.S.C. § 2166 does not require unanimity, both

UBS Bank USA and UBS Financial Services Inc. join in this Notice of Removal.

34. UBS has attached to this Notice of Removal as Exhibits B through D copies of all

process, pleadings, and orders served upon them in the Qui Tam Action that they have been able

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to locate after a reasonable search. The attachment of such documents does not waive or

relinquish any arguments that service of process was insufficient or lacking. See supra ¶ 30.

35. Today, UBS will serve written notice of this Notice of Removal on the Relators

and will file a copy of the notice with the clerk of the Court of First Instance pursuant to 28

U.S.C. § 1446(d).

VENUE

36. Venue is properly laid in this Court as the U.S. district court for the district in

which the Qui Tam Action is pending. 48 U.S.C. § 2166(d)(1).

T R A N S F E R

37. Pursuant to 48 U.S.C. § 2166(d)(3) and Local Rule 3A of the United States

District Court for the District of Puerto Rico, this case should be transferred to the Honorable

Laura Taylor Swain as a proceeding related to In re Commonwealth of Puerto Rico, No. 17-bk03283 (D.P.R.). See, e.g., Voya Institutional Tr. Co. v. Univ. of Puerto Rico, 266 F. Supp. 3d

590, 599-600 (D.P.R. 2017) (transferring to Judge Swain cases that were removed as related to

the Title III Cases).

WHEREFORE, UBS respectfully requests that this Court accept this Notice of Removal,

refer the action to Judge Swain, and grant them such other and further relief as the Court deems

just and proper.

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Dated: July 13, 2023

San Juan, Puerto Rico Respectfully submitted,

/s/ Roberto C. Quiñones-Rivera

Roberto C. Quiñones-Rivera

USDC-PR No. 211512

RCQ@mcvpr.com

/s/ Myrgia M. Palacios-Cabrera

Myrgia M. Palacios-Cabrera

USDC-PR No. 230807

MPC@mcvpr.com

McCONNELL VALDÉS LLC

270 Muñoz Rivera Avenue

Hato Rey, Puerto Rico 00918

Tel.: (787) 250-2631 / 5602

Fac.: (787) 759-8282

and

WILMER CUTLER PICKERING

HALE AND DORR LLP

Peter G. Neiman (admitted pro hac vice)

Philip D. Anker (admitted pro hac vice)

Ross E. Firsenbaum (admitted pro hac vice)

7 World Trade Center

250 Greenwich Street

New York, NY 10007

Tel.: (212) 230-8800

E-mail: peter.neiman@wilmerhale.com

philip.anker@wilmerhale.com

ross.firsenbaum@wilmerhale.com

Counsel to Defendants UBS Bank, USA and

UBS Financial Services Inc.

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CERTIFICATE OF SERVICE

Pursuant to Federal Rule of Civil Procedure 5(b), I certify that on this 13th day of July,

2023, I caused a true and correct copy of NOTICE OF REMOVAL to be served on

counsel for the Relators via e-mail and certified mail, return receipt requested.

/s/ Roberto C. Quiñones-Rivera

Roberto C. Quiñones-Rivera

McCONNELL VALDÉS LLC

270 Muñoz Rivera Avenue

Hato Rey, Puerto Rico 00918

Tel.: (787) 250-2631 / 5602

Fac.: (787) 759-8282

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