UNITED STATES DISTRICT COURT

DISTRICT OF PUERTO RICO

IN RE: PROMESA 

TITLE III

THE FINANCIAL OVERSIGHT AND

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of No. 17 BK 3283-LTS 

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

 DEBTORS

IN RE: PROMESA 

TITLE III

THE FINANCIAL OVERSIGHT AND

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of No. 17 BK 4780-LTS

PUERTO RICO ELECTRIC POWER AUTHORITY

 DEBTORS

MOTION FOR PARTIAL LIFT OF STAY

COMES NOW creditor, Autonomous Municipality of Ponce (herein AMP), through its

undersigned counsel and very respectfully states and prays:

1. Pursuant to Paragraphs III.Q and III.U of Section III (Scheduling) of the Case 

Management Procedures, as amended by Order Further Amending Case Management 

Procedures (docket no. 1512), and subject to Paragraphs III. F and III.T, at least fifteen

(15) business days prior to filing a Stay Relief Motion to continue a prepetition ordinary 

course civil action against a Debtor, the movant shall contact counsel for the Oversight Board

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 1 of 13
and AAFAF by electronic-mail to advise them of the movant’s intent to seek relief from the

automatic stay (the “Lift Stay Notice” and the notice period, the “Lift Stay Notice Period”).

2. The Lift Stay Notice shall include (i) the identity of the movant and its contact 

information, (ii) the claim(s), lawsuit(s), or other proceeding(s) for which movant seeks relief

from the automatic stay, including the relevant case number and court information, (iii) the

amount of the claim(s) and the asserted causes of action, (iv) a brief description of the status

of the underlying claim(s), lawsuit(s), or proceeding(s), and (v) cause as to why the stay 

should be lifted.

3. If (i) the Debtors disagree with the movant’s request for relief from the automatic 

stay and/or (ii) the Lift of Stay Notice Period expires without the parties reaching an

agreement governing the scope of the relief from the automatic stay, then the movant may file

a Stay Relief Motion pursuant to Case Management Procedures. Such Stay Relief Motion

must include a certification that the movant has met and conferred with the Debtors regarding

the requested relief.

4. Movant, AMP, in compliance with the above mentioned Order Further Amending

Case Management Procedures, submits an unsworn statement under penalty of perjury 

certifying the undersigned counsel has taken the necessary steps to confer and/or meet

Debtor’s counsel and no agreement was reached within the 15 working days that pass away 

on April 27, 2018. (See Exhibit I). Commented [CF1]: 

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 2 of 13
I. INTRODUCTION

5. On May 3, 2017 Debtor Commonwealth of Puerto Rico (hereinafter “ELA”) by

its representative and pursuant to section 315 of the Puerto Rico Oversight, Management, and 

Economic Stability Act (hereinafter “PROMESA”), the Financial Oversight and

Management Board for Puerto Rico filed a voluntary petition in the United States District Court

for the District of Puerto Rico under Title III of PROMESA seeking relief from creditors.

6. On May 21, 2017 Debtor Puerto Rico Highway and Transportation Authority 

(hereinafter “HTA”) by its representative and pursuant to section 315 of the Puerto Rico

Oversight, Management, and Economic Stability Act (hereinafter “PROMESA”), the

Financial Oversight and Management Board for Puerto Rico filed a voluntary petition in 

the United States District Court for the District of Puerto Rico under Title III of PROMESA 

seeking relief from creditors.

7. On July 2, 2017 Debtor Puerto Rico Electric Power Authority (hereinafter 

“PREPA”) by its representative and pursuant to section 315 of the Puerto Rico Oversight,

Management, and Economic Stability Act (hereinafter “PROMESA”), the Financial

Oversight and Management Board for Puerto Rico filed a voluntary petition in the United 

States District Court for the District of Puerto Rico under Title III of PROMESA seeking 

relief from creditors.

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 3 of 13
II. BACKGROUND

8. On October 28, 1992 the AMP subscribe with ELA, and some of the 

Instrumentalities and Public Corporations, include Debtors HTA and PREPA, and Agreement 

for the Development of Projects Schedules between the Central Government and the 

Municipality of Ponce (herein the Agreement), and a proper permits was issue and approve by 

the Planning Board of Puerto Rico. In matter pertinent to the present background, after the 

election of 1992 the new Government change the instruction to the Public Instrumentalities and 

Corporations and they withdraw from all the projects. On October 28, 1993, AMP file the case 

of reference and after fifteen (15) days of trial the Court of First Instance Of Puerto Rico, on 

June 24, 1996, Granted the complaint and Order all the Instrumentalities to fulfill all the 

projects as the Agreement and because of the complexity that involve in complying with all 

those projects also Order to appointing a Special Commissioner who audit all projects until its 

finish Delivered, accepted in accordance and also the State Court of First Instance award 

damages on behalf of AMP. (see exhibit II) The Appellative Court and the Supreme Court of 

Puerto Rico confirm in part and bifurcate the case and order an evidentiary hearing for damages 

after the completion of all works (see exhibit III). In December 2004, Debtor ELA and AMP 

comes to a settlement on damages in the amount of 34 million dollars, (see exhibit IV) of which

AMP receive 9 million on a date before 2004 and there is another amount pending.

III. RELIEF REQUESTED

9. Movant seeks a modification of the stay imposed by Section 362 of the Bankruptcy 

Code so that it may continue the Commonwealth Court after the judgement procedures in, the

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 4 of 13
“Ponce en Marcha” case in order to fulfill all the construction works accordingly to the judgment 

but after the completion, stay the damages evidentiary hearing.

IV APPLICABLE LAW

10. Section 362(d)(1) of the Bankruptcy Code (11 U.S.C. §362(d)(1)) reads as 

follows:

(d) On request of a party in interest and

after notice and a hearing, the court shall grant

relief from the stay provided under subsection (a)

of this section, such as by terminating, annulling,

modifying, or conditioning such stay -- (1) for

cause, including the lack of adequate protection of

an interest in property of such party in interest...

11. The courts examine numerous different factors, including those set forth in 

In re Sonnax Indus., 907 F.2d 1280 to determine whether “cause” exists to grant relief 

from stay. The twelve factors adopted by the court in Sonnax are:

(1) whether relief would result in partial or complete 

issue resolution; (2) lack of connection with or 

interference with bankruptcy case; (3) whether other

proceeding involves debtor as fiduciary; (4) whether

specialized tribunal with necessary expertise has been

established to hear cause of action; (5) whether debtor's 

insurer has assumed full defense responsibility; (6) whether

the action primarily involves third parties; (7) whether

litigation in another forum would prejudice interests of 

other creditors; (8) whether judgment claim arising from

other action is subject to equitable subordination; (9) 

whether movant's success in other proceeding would result

in a judicial lien avoidable by debtor; (10) interests of 

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 5 of 13
judicial economy and expeditious and economical 

resolution of litigation; (11) whether parties are ready for

trial in other proceeding; (12) impact of stay on parties and

balance of harms. In re Sonnax Inds., supra, at 1287 citing 

In re Curtis, 40 Bankr. 795, 799-800 (Bankr. D. Utah 1984).

Other courts have established that the Curtis moving party “need not prove a plurality 

of Curtis factors before it has shown cause existed for lifting the stay.” Goya Foods v. UnanueCasal (In re Unanue-Casal), 159 B.R. 90, 96 (1993). Some courts have relied on only a few 

factors to determine that sufficient cause existed to lift the stay. See, e.g., In re Unioil, 54 

Bankr. 192, 194-195 (Bankr. D. Colo. 1985) (court considered five factors such as resolution of the 

issues, lack of connection with the bankruptcy case, judicial economy and balance of hurt). See also 

In re Highcrest Management Co., Inc., 30 Bankr. 776, 778-779 (Bankr. S.D. N.Y. 1983). 

(Court considered only the debtor's misconduct, without any Curtis factors).

The court in Goya Foods v. Unanue-Casal (In re Unanue-Casal), supra, at 96 correctly

stated that “the question of what is cause . . . is developed primarily by case law.” In other 

words, the determination of cause is made on a case by case basis.

12. An order lifting the automatic stay is an “extraordinary remedy.” In re 234-6 West 

22nd St. Corp., 214 B.R. 751, 757 (Bankr. S.D.N.Y. 1997). Bankruptcy Code section 362(d)(1), 

made applicable by PROMESA section 301(a), provides that a court may grant relief from the 

automatic stay “for cause.” See 11 U.S.C. § 362(d)(1). “Cause” is not defined in the Bankruptcy 

Code. In re Unanue-Casal, 159 B.R. 90, 95–96 (D.P.R. 1993), aff’d 23 F.3d 395 (1st Cir. 1994). 

To determine whether “cause” exists to grant relief from the stay, courts examine numerous 

different factors, including those set forth in Sonnax supra. Those are stay prior.

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 6 of 13
13. Courts in this Circuit have adopted these “Sonnax factors.” See Brigade Leveraged 

Capital Structures Fund Ltd. v. Garcia-Padilla, 217 F. Supp. 3d 508, 518 (D.P.R. 2016) (“To help 

guide their analysis of whether to enforce or vacate the stay, some courts, including those in this 

district, have relied upon a laundry list of assorted factors.” (citing Sonnax, at 1286; C & A, S.E. v. 

P.R. Solid Waste Mgmt. Auth., 369 B.R. 87, 94-5 (D.P.R. 2007)); In re Unanue-Casal, 159 B.R. at 

95–96; Peaje Invs. LLC v. Garcia-Padilla, 2016 U.S. Dist. LEXIS 153711, at *13 (D.P.R. Nov. 2, 

2016). 

14. No one factor is dispositive; instead, courts “engage in an equitable, case-by-case 

balancing of the various harms at stake” and will lift the stay only if the harm engendered by 

allowing the stay to remain in place outstrips the harm caused by lifting it. Brigade, 217 F. Supp. 

3d at 529 n.12. Movant bears the burden of establishing cause, id., and when the movant is not a 

secured claimholder asserting a lack of adequate protection, that burden is a high one. See In re 

Breitburn Energy Partners LP, No. 16-10992, 2017 WL 1379363, at *4 (Bankr. S.D.N.Y. Apr. 14, 

2017). Here, the Sonnax factors point squarely toward maintaining the automatic stay and against 

awarding the remedy Movant seeks. 

IV. DISCUSION AND ARGUMENT

Of the twelve factors adopted by the court in Sonnax to determine if cause exists to

grant relief from stay at least nine weigh in favor of AMP.

15. Sonnax Factor 1: The first Sonnax factor primarily focuses on whether the 

separate litigation would expeditiously resolve issues relevant to the bankruptcy case. See, 

e.g., In re Taub, 413 B.R. 55, 62 (Bankr. E.D.N.Y. 2009) (lifting the stay because nonbankruptcy litigation “would resolve significant open issues in the Debtor’s bankruptcy case, 

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 7 of 13
and would assist the Debtor in pursuing the confirmation of a [] plan”); In re Murrin, 477 

B.R. 99, 109 (D. Minn. 2012); In re Cummings, 221 B.R. 814, 818 (Bankr. N.D. Ala. 1998) 

characterizing this factor as in the cases at hand, AMP submits that the automatic stay should 

be modified to allow the state court proceedings to continue with the compliance of the 

constructions works as and all the public works that on construction in a substantially 

completion phase (see exhibit V). We agree to stay collection of remaining damages as 

per agreement.

16. Sonnax Factor 2: The second Sonnax factor—the lack of any connection with 

or interference with the bankruptcy case support lifting or modifying the stay. First, lifting 

or partially modifying the stay to allow the completion of a case who’s resolution came more 

than twenty two years ago would not interfere with the centralized claims resolution process 

contemplated under Title III. Those projects went under construction way prior the filing of 

the PROMESA case and are of public interest as part of the purpose of the government on 

behalf of their citizens Furthermore, lifting or modifying the stay to proceed with the 

fulfilment of the judgement in the “Ponce en Marcha” case will not interfere with the Title 

III case and will not diverting the Commonwealth’s attention and resources to defending as 

those projects are on constant construction works before the lift and after the lift as a matter 

of facts the PREPA buried underland of electric lines just to mention a few. Those projects

are on the way an never stop after the lift of stay was requested and granted, just the Special 

Commissioner supervisor report was lifted and the power of the State Court to review how 

the Debtor finally comply with the Court Judgement. Thus, Sonnax factor 2 weighs in favor 

of granting the Motion. We agree to stay collection of remaining damages as per agreement.

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 8 of 13
17. Sonnax Factor 4: The fourth Sonnax factor—whether a specialized tribunal has 

been established to hear the cause of action at issue—does support granting the 

Motion. There is no better example than “Ponce en Marcha” case, in which two Special 

Commissions was appointed during the twenty two year of existence of this case in order to 

deal with the complex supervision of the al the projects that was performs in order to comply

with the final Judgement of this case. All Special Commissioner that are an engineer and a 

lawyer in order to proper supervise and inform the court of the developments and issues of

all the constructions projects in the Agreement. Thus, Sonnax factor 4 weighs in favor of 

granting the Motion. We agree to stay collection of remaining damages.

18. Sonnax Factor 5: The fifth Sonnax factor—whether the debtor’s insurance 

carrier has assumed full financial responsibility for defending the litigation—does support 

granting the Motion. As there is no litigation in “Ponce en Marcha” case as its all proceeding 

regarding the compliance of the final judgement and the development of those works no need 

of insurer to assume financial responsibility or defending Debtors, no insurer of the 

Commonwealth has to assumed full financial responsibility for defending the Prepetition 

Actions as there is no adjudication to make by the Court. Thus, Sonnax factor 5 weighs in 

favor of granting the Motion. We agree to stay collection of remaining damages.

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 9 of 13
19. Sonnax Factor 6: The sixth Sonnax factor—whether the action essentially 

involves third parties rather than the debtor— support granting the Motion. This factor is not 

based on whether third parties are involved, but rather whether the Prepetition Actions 

primarily involves third parties rather than the debtor. See In re Residential Capital, LLC, 

2012 Bankr. LEXIS 3641, at *20 (Bankr. S.D.N.Y. Aug 8, 2012) (“The court should not grant 

relief from the stay under the sixth Sonnax factor if the debtor is the main party to the 

litigation.”); Grayson v. WorldCom, Inc. (In re WorldCom, Inc.), 2006 U.S. Dist. LEXIS 

55284, at *33 (S.D.N.Y. Aug 4, 2006) (“Grayson offers no argument or claim to show how 

the Bankruptcy Court abused its discretion in determining that Grayson’s claim in this action 

did not primarily involve third parties.” (emphasis in original)). 

20. Here, Debtors are the Commonwealth, PREPA and HTA but in Ponce en Marcha 

case there are other parties like the Ports Authority who are not on PROMESA, Claro as 

successor of the Puerto Rico Telephone Company, are also part of the case in the develop of 

those public projects and most of those are more that 90 % completed and never stop. Their 

budget are separate in order to comply with this public works. Therefore, Sonnax factor 6 

weighs in favor of granting the Motion. We agree to stay collection of remaining damages as 

per agreement.

21. Sonnax Factor 7: The seventh Sonnax factor—whether the litigation could 

prejudice the interest of other creditors— support granting the Motion. As there is no 

litigation pending in “Ponce en Marcha” case The Commonwealth would not have to expend 

considerable time and resources to litigate the Lawsuit, there is no discovery, no pretrial 

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 10 of 13
hearings and no trial. Courts have denied requests to lift the automatic stay where the debtor 

would be required to expend its limited resources to defend against litigation. See, e.g., re 

Plumberex Specialty Prod., Inc., 311 B.R. 551, 563-64 (Bankr. C.D. Cal. 2004) (rejecting 

effort to lift stay in part because “the cost of protracted litigation of a separate proceeding in 

a non-Case:17-03283-LTS bankruptcy forum would prejudice the interests of other creditors 

of the estate”); In re Motors Liquidation Co., No. 09- 50026, 2010 WL 4630327, at *4 

(S.D.N.Y. 2010) (finding no abuse of discretion where bankruptcy court concluded in 

denying lift-stay motion that “allowing Appellant to proceed with the ERISA suit would force 

[debtor] to expend estate resources to defend that” and thus “would prejudice the interests of 

other creditors”). This is not the situation in the “Ponce en Marcha” case, the resources of 

the Debtor are an will be on the construction of those public works and the project meetings 

will still be held but now with the presence of the Special Commissioner as he is an engineer 

like the others in charge of their respective projects on behalf of Debtors. The hearings in 

Court will be to inform the developments of those projects. Accordingly, Sonnax factor 7 

does support granting the Motion. We agree to stay collection of remaining damages as per 

agreement.

22. Sonnax Factors 10 and 11: The Movant’s assertion, as a matter of fact an law, 

is that the “Ponce en Marcha” case was a bifurcate judgement that its final regarding the 

compliances of the constructions works. As those complex constructions projects are on final 

phases there is no court proceeding that’s remains on preliminary stages. Thus, Sonnax 

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 11 of 13
factors 10 and 11 weigh in favor of the Motion. See In re Sonnax. We agree to stay collection 

of remaining damages as per agreement.

23. Sonnax Factor 12: Balancing of the harms clearly favors the Motion. The impact 

on the Commonwealth if the Motion were to be granted would be minimum and will not 

outweigh any harm that Movant would suffer if the automatic stay remains in place. The 

construction of those public works as per Agreement still on process after the lift of stay and 

the AMP or the State Court has no knowledge of the develop and the Special Commissioner

could not info the Court if they are complying. The AMP could not continue or finish any of 

those projects as there is no municipality funds to expend in property that no belong to the 

County. Thus, Sonnax factor 12 weighs in favor of the Motion. We agree to stay collection 

of remaining damages.

 V. CONCLUSION

24. AMP has established with substantial arguments there is cause for the partial lifting of 

the automatic stay. Modifying the stay to allow the state continue to watch the development 

of the public work of Debtors by the Special Commissioner promotes the judicial economy

and expeditious and economical resolution of the litigation.

WHEREFORE, it is respectfully prayed that AMP be granted relief from the automatic stay 

pursuant to 11 U.S.C. §362(d)(1) as to PREPA, HTA and ELA and to the estate, to continue the 

proceedings at the state court civil cases of “Ponce en Marcha” in order to finally develop all the 

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 12 of 13
public works as the Agreement, with such other and further relief as this Court deems just and 

proper.

CERTIFICATE OF SERVICE: I hereby certify that pursuant to Paragraphs III.Q and 

III.U of Section III (Scheduling) of the Case Management Procedures, as amended by Order

Further Amending Case Management Procedures (docket no. 1512), and subject to Paragraphs III. 

F and III.T, at least fifteen (15) business days prior to filing the present motion for relief from stay 

to continue a prepetition ordinary course civil action against PREPA, the movant, AMP, 

contacted the counsel for the Oversight Board and PREPA by electronic-mail to advise them of 

the movant’s intent to seek relief from the automatic stay and no agreement was reached.

RESPECTFULLY SUBMITTED.

In Ponce, Puerto Rico, this 4

th of May, 2018.

/S/ Carlos Fernández Nadal

CARLOS FERNÁNDEZ NADAL, ESQ.

RUA# 10,655

Ave. Hostos #818 Ste. B

Playa de Ponce PR 00716

Tel. 848-4612 Tel/Fax 848-4632

Email: carlosfernandez@cfnlaw.com

Web Page: www.cfnlaw.com

Case:17-03283-LTS Doc#:3019 Filed:05/04/18 Entered:05/04/18 17:08:03 Desc: Main

Document Page 13 of 13