1

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)

OBJECTION BY AAFAF,

2 ACTING AS REPRESENTATIVE OF GDB, 

TO THE UCC’S INFORMATIVE MOTION REGARDING RENEWED

RULE 2004 MOTION AND DISCOVERY ITEMS TO BE 

ADDRESSED AT JULY 25, 2018 OMNIBUS HEARING

To the Honorable Judith Gail Dein

United States Magistrate Judge:

AAFAF, acting as representative of GDB, through its undersigned counsel hereby states 

and prays as follows:

 

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).

2 References to: (i) “AAFAF” are to the Puerto Rico Fiscal Agency and Financial Advisory Authority; (ii) 

“GDB” are to the Government Development Bank for Puerto Rico; (iii) the “UCC” are to the Official 

Committee of Unsecured Creditors; (iv) the “Retirees’ Committee” are to the Official Committee of Retired 

Employees of the Commonwealth of Puerto Rico; (v) “Committees” are to the UCC and the Retirees’ 

Committee together; (vi) “Motion” are to the UCC’s July 3, 2018 Informative Motion Regarding Renewed Rule 

2004 Motion and Discovery Items to be Addressed at July 25, 2018 Omnibus Hearing [ECF No. 3424]; and 

(vii) “Investigator” are to Kobre & Kim LLP, which was appointed as Independent Investigator by the Special 

Investigation Committee of the Financial Oversight and Management Board for Puerto Rico established under 

the Puerto Rico Oversight, Management, and Economic Stability Act. Unless otherwise specified, all emphasis 

is added and all internal citations and quotations are omitted.

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1. On July 3, 2018, the UCC filed what it called an “informative motion” ostensibly 

to raise issues it wants the Court to consider at the July 25, 2018 Omnibus hearing. In reality, 

however, the informative motion is an effort to skirt this Court’s previous ruling and to seek 

discovery of documents under Rule 2004 before the UCC has had the opportunity to review the 

Investigator’s report and the underlying documents on which it relies. In burdening GDB and 

seeking to invade its confidential information, the UCC now seeks documents to which it has no 

legal entitlement. Moreover, the UCC’s complaints that it has inadequate information regarding

the materials produced to the Investigator have no basis in fact.

2. The Investigator has invited the Committees to participate in the process of seeking 

documents from GDB by allowing the Committees to identify documents and information they 

think should be part of the Investigation. In that regard, the Investigator has explained in 

painstaking detail the process for selecting production of GDB documents. Rather than take “yes”

for an answer and accept the detailed explanation it has already received, the UCC is attempting 

to create a dispute for the July 25 Omnibus Hearing that is not ripe.

BY THE JULY 25 OMNIBUS HEARING, THE COMMITTEES WILL KNOW 

EXACTLY WHAT GDB HAS PRODUCED TO THE INVESTIGATOR

3. The UCC contends that it does not know whether the Investigator “has received 

specific, discrete categories of items that are” supposedly “relevant to the Committee’s claimsidentification efforts”3

; namely (i) GDB Board materials; (ii) GDB directors’- and officers’-

liability insurance policies; and (iii) productions GDB may have made to its regulators (such as 

the SEC). The UCC is wrong.

 

3 The Committees have not been authorized to undertake a claims-identification process and have not identified 

what kind of claims the Commonwealth could have against GDB or why the Committee would be the 

appropriate party to pursue such claims.

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4. GDB agreed nearly a month ago to produce to the UCC and the Retirees’ 

Committee all non-privileged documents that GDB, through its representative AAFAF, has 

produced (or will produce) to the Investigator.4 AAFAF, acting as GDB’s representative, has 

produced to the Committees more than 5,000 non-privileged documents, which comprise all nonprivileged documents provided to the Investigator to date. There are additional outstanding

Investigator requests. With respect to these additional documents, AAFAF’s counsel has made 

abundantly clear to the UCC that it will receive non-privileged documents produced in response 

to those requests simultaneously with or shortly after their production to the Investigator.5 AAFAF 

and GDB currently expect those productions to be complete before the July 25 Omnibus Hearing.

5. In addition, AAFAF, acting as GDB’s representative, provided a categorical 

privilege log to the Committees on June 20, 2018. Even though it had no obligation to do so, GDB 

agreed to provide a document-by-document privilege log listing every document withheld from 

production or redacted on the basis of attorney-client privilege, the attorney work-product 

immunity, the deliberative process privilege, or any other applicable privilege or immunity from 

discovery.6 AAFAF and GDB currently expect that this document-by-document privilege log will 

be completed and produced to the Committees before the July 25 Omnibus Hearing.7

 

4 See June 6, 2018 Hr’g Tr. at 111:25–112:5 (“I, today, while we were sitting here in court, received permission 

from GDB to provide non-privileged documents to share with the investigator, to the UCC and the Retirees’ 

Committee on an attorneys’ eyes only basis, again, pending execution of an NDA that’s acceptable to GDB and 

to the committees.”).

5 See Ex. 1 (July 2, 2018 email from W. Sushon) (“We will produce to the Committees any non-privileged GDB 

documents produced to the Investigator at the same time those documents are produced to the Investigator or 

shortly thereafter.”).

6 See Ex. 2 (June 26, 2018 email from P. Friedman) (“Rather than have a call, we think the most productive route 

is for us to [] put together a document by document log in light of the questions you’ve raised.”).

7 GDB agreed to provide a document-by-document log of any material withheld not for privilege, but (i) as to 

which the elected Government of Puerto Rico has a confidentiality obligation to others that prohibits the elected 

Government of Puerto Rico from disclosing the information or (ii) for which restricted access is necessary to 

prevent a risk of harm to the elected Government of Puerto Rico in the exercise of its political or governmental 

powers. At this point, no documents exist in either of these categories. But if any arise, GDB will provide a 

document-by-document log to the Committees.

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6. Thus, unless the Investigator makes additional requests of GDB, the Committees 

should have in their possession, before the July 25 Omnibus Hearing (and weeks before the 

Investigator’s report is released in mid-August), every non-privileged GDB document produced 

to the Investigator and document-by-document log entries for any document produced to the 

Investigator but withheld from the Committees. This disclosure is more than adequate for the 

Committees to determine what GDB documents have been produced to the Investigator, thereby 

addressing the Court’s stated concern at the June 6, 2018 Omnibus Hearing.8 The UCC will 

therefore be able to determine for itself whether the production includes GDB Board materials, 

productions to any regulators, or any other information the UCC wants to know.

7. The UCC also insists it must know now the Investigator’s informational requests 

of GDB to understand what documents the Investigator has received. (See Motion ¶ 6 (“[T]he 

Committee cannot be left uninformed as to whether documents like these have been received by 

the Investigator.”).) Of course, as explained above, the UCC will know exactly what GDB 

documents “have been received by the Investigator.” But even if the UCC were entitled to know 

what the Investigator sought (as opposed to received), the UCC’s requests should be directed to 

the Investigator, not AAFAF or GDB. Indeed, the Investigator required AAFAF and GDB to sign 

a non-disclosure agreement that prohibits them from revealing such substantive information about 

the investigation to anyone. And as the Investigator has made clear to the Court, the Investigator 

has provided the UCC extensive information about the investigation (including the Investigator’s 

document requests) in weekly calls, and even given the UCC the opportunity to recommend 

 

8 See June 6, 2018 Hr’g Tr. at 127:21–128:5 (“The overarching thing that I wanted to say is that the Committee is 

going to get these documents. All right? Because I’m not going to end up in a fight about whether investigations 

are duplicative because the Committee doesn’t know what documents have already been produced. . . . But the 

Committee can’t be in a position of saying I want these documents, and then not knowing whether or not 

they’ve been produced.”); See Ex. 3, see also Motion ¶ 1.

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specific requests that the UCC would like the Investigator to make.9 But at least as of June 6, 

2018, the UCC had not availed itself of that opportunity. 

THE UCC’S REQUESTS FOR SO-CALLED “DAY ONE” 

DOCUMENTS ARE PREMATURE AND IMPROPER

8. The UCC also demands that GDB immediately produce to the Committees (i) GDB 

Board materials, (ii) GDB D&O policies, and (iii) any GDB document productions to regulators 

in their investigations. These requests are both premature and inappropriate.

9. The Court has never contemplated GDB’s producing additional documents in 

response to UCC document demands before publication of the Investigator’s report.10 Indeed, 

allowing such document requests would undermine the very reason that the Court denied the 

UCC’s original Rule 2004 requests (albeit without prejudice)—namely that authorizing the UCC 

to proceed with discovery while the Investigator’s work is ongoing would threaten to create 

unnecessary duplication and expense.11 The UCC should wait a few more weeks to see what the 

Investigator has uncovered and then evaluate whether any additional discovery is truly necessary. 

 

9 See July 3, 2018 Motion of the Independent Investigator [ECF No. 3427] ¶ 28 (“The Independent Investigator 

executed a Confidentiality, Cooperation, and Non-Disclosure Agreement with the Official Committee of 

Retired Employees of the Commonwealth of Puerto Rico (the ‘Retiree Committee’) on November 3, 2017. The 

Independent Investigator executed a Confidentiality, Cooperation, and Non-Disclosure Agreement with the 

Creditors’ Committee on March 5, 2018. Under these agreements, the Independent Investigator has conducted 

weekly investigation update calls with each of the Retiree Committee and the Creditors’ Committee (together, 

the ‘Committees’). On its weekly calls, the Independent Investigator has kept the Committees informed of the 

witnesses with whom the Independent Investigator would be speaking, and the proposed areas of inquiry for 

those witnesses. The Independent Investigator solicited and received the Committees’ input on multiple aspects 

of the Investigation, including input concerning proposed document requests, custodians, and search terms for 

various witnesses.”).

10 See June 18, 2018 Hr’g Tr. at 40:25–41:8 (“So, the way I generally envision this is that the Committees will be 

aware of the scope of the information that has been produced, that they would await the report, assuming we’re 

dealing with mid-August and not September 25th -- 21st, okay -- and that, at that point, if the Committees 

required additional document requests, they would need to justify it and, as I talked about last time, some sort of 

budget on it.”). See Ex. 4.

11 See Nov. 15, 2017 Hr’g Tr. at 82:8–17 (“As to the creditors committee, the 2004 motion, it is denied without 

prejudice. I think, at this point, the UCC has not established the need for the independent examination in light of 

the independent investigation that is going on. It would not be efficient or cost effective to have parallel 

investigations going on at this time, and while the parties may ultimately view and analyze the information 

differently, I think at this point there is a common goal of obtaining the information and understanding the 

underlying facts.”). See Ex. 5.

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If the UCC still believes that it requires additional discovery, then as the Court made clear, the 

UCC must (i) request the Court’s permission, (ii) lay out a budget, and (iii) persuade the Court that 

the potential value of the discovery outweighs the costs it will inflict on Puerto Rico.12

10. That the discovery is not yet ripe should end the matter. But even if the discovery 

were ripe, the UCC would not be able to meet its burden to show that its current additional requests

(for GDB Board documents, directors’- and officers’- liability insurance policies, and productions 

to regulators) are appropriate. First, a request for all of GDB’s Board materials is plainly 

overbroad and unduly burdensome. The UCC fails to tailor this request to relevant subsets of 

Board documents, such as requests that concern particular bond issuances or targeted time periods. 

The UCC—which is not a Committee constituted for GDB and has not established that, as UCC 

of Commonwealth, it has any basis to take intrusive discovery into GDB’s affairs—has no right to 

all “GDB Board of Directors materials (including meeting minutes, agendas, board books, and 

presentations, including for all subcommittees of the GDB Board such as audit, risk, or governance 

committees)” without limitation. Moreover, many GDB Board materials implicate complex 

privilege issues that will likely require a painstaking document-by-document review that imposes

substantial expense on AAFAF and GDB. 

11. Second, the UCC has no entitlement to GDB’s D&O policies. The UCC contends 

that these policies will assist the UCC in valuing claims against GDB’s former directors and 

officers. But the UCC is not a GDB creditor. At most, it is a stakeholder in the Commonwealth 

 

12 See June 6, 2018 Hr’g Tr. at 130:6–10 (“On the other side, though, when we get to the I want more stage, which 

I know will come, that's actually going to have to be fairly identified as to what's needed, why, and probably 

some budget on what the additional search will involve.”); June 18, 2018 Hr’g Tr. at 40:25–41:8 (“So, the way I 

generally envision this is that the Committees will be aware of the scope of the information that has been 

produced, that they would await the report, assuming we’re dealing with mid-August and not September 25th --

21st, okay -- and that, at that point, if the Committees required additional document requests, they would need 

to justify it and, as I talked about last time, some sort of budget on it.”).

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Title III case. While the Commonwealth is theoretically a potential GDB creditor, it owes GDB 

more than $900 million on a net basis.

13

 To the extent that GDB could possibly have claims against 

its former directors or officers for breach of their fiduciary duties, neither the Commonwealth nor 

its statutory committees has the power to pursue those claims. Nor has the UCC identified how 

Commonwealth could have direct claims, much less how the UCC could pursue them. Thus, the 

UCC has no interest in valuing those claims and no need for GDB’s insurance policies.

12. Third, a request for documents that GDB produced to the SEC or other regulators 

is likewise overbroad, unduly burdensome, and speculative. As with the UCC’s request for GDB 

Board materials, the UCC makes no attempt to limit this request, which is for “all of the 

productions made by those institutions to regulators (SEC, FINRA, etc.) in connection with any 

investigations into the issuance, underwriting, or sale of Puerto Rico bonds.” (Motion ¶ 5.) Nor 

does the UCC attempt to explain why it believes these materials are relevant at all, much less

indicate which specific investigations it believes are relevant. Thus, if it were required to respond 

to this request, GDB would be required to (i) identify the full universe of investigations that the 

UCC might want, without any guidance from the UCC, and then (ii) attempt to locate all 

documents related to each investigation. And while the UCC complains that some of the materials 

the Investigator has received directly from regulators are subject to confidentiality restrictions 

prohibiting the Investigator from sharing the documents with the UCC, that does not mean that the 

GDB is free to produce those documents to the Committees.

 

13 See Fourth Amendment to Restructuring Support Agreement, dated March 26, 2018, Appendix 7 (showing 

$905,491,922 owing from the Commonwealth to GDB, post set-off). See Ex. 6.

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THE INVESTIGATOR HAS ALREADY GIVEN THE UCC ALL THE

DETAILS OF THE INVESTIGATOR’S REVIEW OF GDB’S DOCUMENTS

13. “In an abundance of caution,” the UCC states that it wants more information about 

how the GDB email review database worked and how the Investigator searched that database. But 

this information was already detailed extensively in the Investigator’s June 13 status report [ECF

No. 3303],

14 including an exhibit that exhaustively listed the search terms that the Investigator 

used in searching each document custodian’s files. The UCC does not explain why this is 

inadequate or what additional information it actually needs and why. Indeed, it seems that the 

UCC is more interested in jousting with the Investigator and GDB than in actually reviewing the 

information it has, evaluating the Investigator’s report when it is published, and determining 

whether there are additional, justifiable avenues for discovery that the UCC might pursue. While 

the UCC’s current efforts are well-designed to earn additional fees for its counsel, they are illsuited to advancing the creditors’ or Puerto Rico’s interests.

[Signature Block on Next Page]

 

14 Portions of this report were filed under seal, but the UCC received an unsealed version of the relevant portions 

of the report.

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Dated: July 10, 2018

San Juan, Puerto Rico

Respectfully submitted,

/s/ John J. Rapisardi 

O’MELVENY & MYERS LLP

John J. Rapisardi 

William J. Sushon

7 Times Square

New York, NY 10036

Tel: (212) 326-2000

Fax: (212) 326-2061

Peter Friedman

1625 Eye Street, NW

Washington, DC 20026

Tel: (202) 383-5300

Fax: (202) 383-5414

Attorneys for the Puerto Rico Fiscal Agency 

and Financial Advisory Authority, in their own 

capacity and acting as representative of the 

Government Development Bank for Puerto 

Rico

/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

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