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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

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:

In re: :

:

THE FINANCIAL OVERSIGHT AND : PROMESA

MANAGEMENT BOARD FOR PUERTO RICO, : Title III

:

as representative of : Case No. 17-BK-3283 (LTS)

:

THE COMMONWEALTH OF PUERTO RICO, et al., : (Jointly Administered)

:

Debtors.1:

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STATEMENT OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS 

IN RESPONSE TO LIMITED OBJECTION OF PBA FUNDS, DATED 

FEBRUARY 20, 2018, TO MOTION TO EXTEND TIME TO ASSUME

OR REJECT UNEXPIRED LEASES, DATED FEBRUARY 13, 2018

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

The Official Committee of Unsecured Creditors of all title III Debtors (other than 

COFINA) (the “Committee”) hereby submits its statement (the “Statement”) (i) in response to 

the Limited Objection of the PBA Funds to the Motion to Extend Time to Assume or Reject 

Unexpired Leases [Docket No. 2557] (the “Objection”) and (ii) in support of the Motion for 

Entry of Third Order Extending Time to Assume or Reject Unexpired Leases of Nonresidential 

Real Property Under Which the Puerto Rico Public Building Authority is the Lessor Pursuant 

 

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. 17-BK3283 (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. 17-BK-3566(LTS)) (Last 

Four Digits of Federal Tax ID: 9686), (iii) Puerto Rico Highways and Transportation Authority (“HTA”) 

(Bankruptcy Case No. 17-BK-3567 (LTS)) (Last Four Digits of Federal Tax ID: 3808), (iv) Puerto Rico Sales 

Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17-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) (Last Four Digits of Federal Tax ID: 3747).

Case:17-03283-LTS Doc#:2605 Filed:02/28/18 Entered:02/28/18 12:13:50 Desc: Main

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to Bankruptcy Code Section 365(d)(4) [Docket No. 2494] (the “Motion”). In support of this 

Statement, the Committee respectfully states as follows:

STATEMENT 

1. The PBA Funds2assert that any extension of the Debtors’ time for deciding 

whether to assume or reject unexpired leases should be subject to the Rent Motion, in which the 

PBA Funds assert that, under section 365(d)(3) of the Bankruptcy Code, the PBA is entitled to 

no less than $289 million of “rent” payments under its purported leases (the “Purported 

Leases”) with the Debtors. As explained in the Committee’s Preliminary Objection3to the 

Rent Motion, however, the Purported Leases are not enforceable under section 365(d)(3) of the 

Bankruptcy Code because they are in reality not “leases” at all but rather components of a 

thinly disguised financing transaction between the Commonwealth and the PBA. 

2. Moreover, the PBA Funds have not shown that they (as opposed to the PBA 

itself) have standing to seek relief from the Debtors under section 365(d)(3) for a variety of 

reasons, including the reasons set forth in the Debtors’ objection to the Rent Motion4and 

because, as explained in the Preliminary Objection, the bonds held by the PBA Funds are 

potentially invalid as having been issued in violation of constitutional debt limits. As the PBA 

Funds acknowledge, sections 365(d)(3) and (d)(4) of the Bankruptcy Code “work in tandem to 

balance the rights of landlords and tenants.”5 Because the PBA Funds have no rights under 

section 365(d)(3), they have no right to demand relief under 365(d)(4), either.

3. For these reasons, the Objection should be overruled. 

 

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the 

Objection. 

3 The “Preliminary Objection” is the Preliminary Objection of Official Committee of Unsecured Creditors to 

Motion of PBA Funds for Payment of Rent Dated February 13, 2018 [Docket No. 2586].

4

See Objection of Financial Oversight and Management Board to Motion of PBA Funds for the Payment of 

Rent [Docket No. 2587].

5 Objection ¶ 2.

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WHEREFORE, the Committee respectfully requests that the court overrule the 

Objection and grant the Motion.

Dated: February 28, 2018

San Juan, Puerto Rico

/s/ Luc A. Despins .

PAUL HASTINGS LLP

Luc A. Despins, Esq. (Pro Hac Vice)

G. Alexander Bongartz, Esq. (Pro Hac Vice)

200 Park Avenue 

New York, New York 10166

Telephone: (212) 318-6000 

lucdespins@paulhastings.com 

alexbongartz@paulhastings.com

Nicholas A. Bassett, Esq. (Pro Hac Vice)

875 15th Street, N.W.

Washington, D.C. 20005

Telephone: (202) 551-1700

nicholasbassett@paulhastings.com

Counsel to the Official Committee of Unsecured Creditors 

for all title III Debtors (other than COFINA)

– and –

/s/ Juan J. Casillas Ayala .

CASILLAS, SANTIAGO & TORRES LLC

Juan J. Casillas Ayala, Esq., USDC - PR 218312

Diana M. Batlle-Barasorda, Esq., USDC - PR 213103

Alberto J. E. Añeses Negrón, Esq., USDC - PR 302710

Ericka C. Montull-Novoa, Esq., USDC - PR 230601 

El Caribe Office Building, 53 Palmeras Street, Ste. 1601

San Juan, Puerto Rico 00901-2419

Telephone: (787) 523-3434

jcasillas@cstlawpr.com

dbatlle@cstlawpr.com

aaneses@cstlawpr.com 

emontull@cstlawpr.com

Local Counsel to the Official Committee of Unsecured 

Creditors for all title III Debtors (other than COFINA)

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