UNITED STATES DISTRICT COURT 

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)

INFORMATIVE MOTION REGARDING THE TITLE VI FILING CONTEMPLATED 

BY THE GOVERNMENT DEVELOPMENT BANK FOR PUERTO RICO

To the Honorable Laura Taylor Swain

United States District Judge:

The Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), through its 

undersigned counsel, hereby states and prays as follows:

1. On May 15, 2017, AAFAF, the Government Development Bank for Puerto Rico 

(“GDB”) and a substantial portion of its creditors executed a Restructuring Support Agreement 

(“RSA” and the parties thereto, the “RSA Parties”), which inter alia contemplates the filing of an 

application for approval of a Qualifying Modification under Title VI of the Puerto Rico Oversight, 

Management, and Economic Stability Act (“PROMESA”).

 

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 

(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); and (v) Puerto Rico Electric Power Authority (“PREPA”) (Bankruptcy Case No. 17 BK 4780-

LTS) (Last Four Digits of Federal Tax ID: 3747). (Title III case numbers are listed as Bankruptcy Case numbers 

due to software limitations).

Case:17-03283-LTS Doc#:3242 Filed:06/04/18 Entered:06/04/18 20:02:46 Desc: Main

Document Page 1 of 6
2

2. Under the RSA, those creditors agreed to support the proposed modification of 

GDB’s debt, and GDB agreed to meet certain milestones in obtaining certification from the 

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

and court approval in accordance with Title VI. The Oversight Board originally certified the 

modification contemplated by the RSA on July 12, 2017, thus making it a “Qualifying 

Modification” under Title VI.

3. Given the disruptions and devastation caused by hurricanes Irma and María, 

AAFAF, GDB, and the creditors supporting the RSA concluded that the terms of the proposed 

modification and the existing deadlines for the remaining milestones in the RSA were no longer 

feasible. As a result, the RSA Parties entered into four amendments to the RSA. The primary 

purpose of the first three amendments was to extend the milestone dates under the RSA to allow 

the parties time to work through the implications of the hurricanes. The fourth amendment to the 

RSA, entered into on April 6, 2018, resulted in (i) the adoption of a revised term sheet setting forth

the terms of the Qualifying Modification, and (ii) a further extension of the RSA deadlines

(the “Amended RSA”). 

4. The Amended RSA makes several important changes as it relates to the treatment 

of Puerto Rico’s 78 municipalities. Since hurricanes Irma and María hit Puerto Rico, the RSA 

Parties have worked collaboratively to find ways to provide relief to those municipalities as they 

recover from the storms. As a result of those efforts, the Amended RSA provides that, upon 

consummation of the Qualifying Modification, the full amount of each municipality’s deposits 

held at GDB will be automatically applied against the balance of any loans owed by such 

municipality to GDB. In addition, the Amended RSA gives municipalities the opportunity to 

receive payment, before consummation of the Qualifying Modification, of 55% of such 

Case:17-03283-LTS Doc#:3242 Filed:06/04/18 Entered:06/04/18 20:02:46 Desc: Main

Document Page 2 of 6
3

municipality’s undisbursed certified Excess CAE invested in deposit accounts at GDB in exchange 

for a release of claims related thereto. The Amended RSA also results in a simplified structure 

whereby GDB’s financial creditors will exchange their claims for only one tranche of new bonds. 

On May 8, 2018, the Oversight Board recertified the Amended RSA as a Qualifying Modification. 

5. Under the Amended RSA, the deadline to complete solicitation of the Qualifying 

Modification is June 8, 2018. The RSA Parties are in the process of negotiating a fifth amendment 

to extend this deadline, along with the other milestone dates. A summary of the extended dates 

proposed by AAFAF and GDB is as follows:

Event Date

Deliver Substantially Complete Drafts of Solicitation Documents to 

the Oversight Board

June 22, 2018

Launch Solicitation July 5, 2018

Commence Title VI proceeding in District Court July 6, 2018

Complete Solicitation August 6, 2018

6. After solicitation of the Qualifying Modification is launched, AAFAF and GDB 

anticipate commencing the Title VI proceeding, pursuant to Rule 3.1 of the Local Rules of the 

District of Puerto Rico, by filing an application for approval of the Qualifying Modification 

(the “Approval Application”). In addition, after completion of the solicitation, the Oversight 

Board must certify that the voting requirements and other requirements of PROMESA Section 

601(m)(B) have been satisfied.

7. Under Title VI, the Court’s review of the Approval Application is limited to 

determining whether “the requirements of [PROMESA Section 601] have been satisfied.” 

48 U.S.C. § 2231(m)(1)(d). Accordingly, the Court will be asked to determine only whether GDB 

and AAFAF properly submitted the Qualifying Modification to the Oversight Board for 

certification, id. § 2231(f), (g), and complied with Title VI’s requirements for (i) vote pooling and 

claim classification (including classification as an unsecured claim as opposed to a property right), 

Case:17-03283-LTS Doc#:3242 Filed:06/04/18 Entered:06/04/18 20:02:46 Desc: Main

Document Page 3 of 6
4

id. § 2231(d); (ii) vote solicitation, id. § 2231(h); and (iii) vote tabulation, id. §2231(b), (j). 

Because a debt restructuring under Title VI is a voluntary process that must be approved by the 

holders of “at least two-thirds of the Outstanding Principal amount of the Outstanding Bonds in 

each Pool that have voted,” (provided that such holders represent “not less than a majority of the 

aggregate Outstanding Principal amount of all the Outstanding Bonds in each Pool”) id. § 2231(j), 

the Court need not assess the overall fairness of the Qualifying Modification to GDB’s creditors. 

It is sufficient that they have the opportunity to cast an informed vote and that the votes are pooled 

and tabulated in accordance with Title VI. 

8. The Approval Application will seek to establish clear procedures related to the 

approval of the Qualifying Modification, including the timeline for parties to object to the vote 

pooling, solicitation, and tabulation procedures, thus ensuring that all parties with a stake in GDB’s 

restructuring have an opportunity to be heard in connection with the Title VI.

9. Specifically, as set forth in the table below, GDB and AAFAF intend to propose 

the following procedures related to Court approval of the Qualifying Modification:

Proposed Timetable

Filing of Approval Application T

Deadline to Object to Approval Procedures T+ 7 days 

Deadline to Object to the Qualifying Modification T+ 28 days 

Reply Deadline T+ 42 days 

Qualifying Modification Approval Hearing T+ 45 days (or as soon thereafter as the 

Court is available)

10. GDB and AAFAF propose to provide all of GDB’s creditors with notice of the filing 

of the Approval Application, and related objection deadlines. Setting the deadline to object to the 

Qualifying Modification 28 days following the service of the Approval Application will provide 

parties in interest with sufficient time to consider whether to interpose any objections to the vote 

Case:17-03283-LTS Doc#:3242 Filed:06/04/18 Entered:06/04/18 20:02:46 Desc: Main

Document Page 4 of 6
5

pooling, solicitation, and tabulation procedures, while providing the Court, GDB, AAFAF, and all 

parties in interest with sufficient time to consider any such objections before the Approval hearing.

[Signature Block on Next Page]

Case:17-03283-LTS Doc#:3242 Filed:06/04/18 Entered:06/04/18 20:02:46 Desc: Main

Document Page 5 of 6
6

Dated: June 4, 2018

San Juan, Puerto Rico

Respectfully submitted,

/s/ Suzzanne S. Uhland 

John J. Rapisardi 

Suzzanne Uhland

Peter Friedman

(Admitted Pro Hac Vice)

O’MELVENY & MYERS LLP

7 Times Square

New York, NY 10036

Tel: (212) 326-2000

Fax: (212) 326-2061

Attorneys for the Puerto Rico Fiscal Agency 

and Financial Advisory Authority

/s/ Luis C. Marini-Biaggi

Luis C. Marini-Biaggi

USDC No. 222301 

Carolina Velaz-Rivero

USDC No. 300913

MARINI PIETRANTONI MUÑIZ LLC

MCS Plaza, Suite 500

255 Ponce de León Ave.

San Juan, Puerto Rico 00917

Tel: (787) 705-2171

Fax: (787) 936-7494

Attorneys for the Puerto Rico Fiscal Agency 

and Financial Advisory Authority

Case:17-03283-LTS Doc#:3242 Filed:06/04/18 Entered:06/04/18 20:02:46 Desc: Main

Document Page 6 of 6