Hearing Date: June 6, 2018 at 9:30 a.m. AST

Objection Deadline: April 9, 2018 (for parties other than the Fee Examiner)

IN THE UNITED STATES DISTRICT COURT

FOR THE 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)

SUMMARY COVER SHEET TO THE SECOND APPLICATION OF FTI 

CONSULTING, INC. FOR ALLOWANCE OF COMPENSATION FOR 

SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES 

INCURRED AS FINANCIAL ADVISOR TO THE OFFICIAL 

COMMITTEE OF RETIRED EMPLOYEES OF THE 

COMMONWEALTH OF PUERTO RICO FROM OCTOBER 1, 2017 

THROUGH JANUARY 31, 2018

Name of Applicant: FTI Consulting, Inc.

Authorized to Provide Services To: The Official Committee of Retired 

Employees of the Commonwealth 

of Puerto Rico

Retention Date: June 27, 2017

1

The Debtors in these jointly-administered PROMESA 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: (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 (Bankruptcy Case No. 17 BK 3284) (Last Four Digits of Federal Tax ID: 

8474); (iii) Puerto Rico Highways and Transportation Authority (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 (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax 

ID: 9686); and (v) Puerto Rico Electric and Power Authority (Bankruptcy Case No. 17 BK 4780) (Last 

Four Digits of Federal Tax ID: 3747).

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2

Period for which compensation is sought: October 1, 2017 through January 

31, 2018

Monthly Fee Statements subject to the request: October 2017—January 2018

Total compensation sought this period: $1,127,271.50

Total expenses sought this period: $21,853.96

Petition Date: May 3, 2017

Retention Date: June 27, 2017

Date of Order Approving Employment: October 6, 2017

Total compensation approved by interim order to date: $658,246.00

Total expenses approved by interim order to date: $5,072.35

Total compensation paid to date: $728,991.45

Total expenses paid to date: $9,235.72

Total compensation subject to objection: None

Total expenses subject to objection: None

Blended rate in this application for all professionals: $580.98

Number of Professionals Included in this Application: 20

Difference Between Fees Budgeted and Compensation 

Sought: Not Applicable

Number of Professionals Billing Fewer than 15 Hours 

to this Case: 5

Rates Higher than Those Disclosed at Retention: FTI adjusted its scheduled hourly 

rates as of January 1, 2018. All 

time recorded in January 2018 is 

at 2018 rates, which are reflected 

herein.

The fee or expense totals in this application are not different from the sum of previouslyserved monthly statements.

This is an interim application.

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3

The total time expended for fee application preparation for the Interim Fee Period is 

approximately 178.1 hours and the corresponding compensation requested is approximately 

$90,372.00.

Objection Deadline: April 9, 2018 (for parties other 

than the Fee Examiner)

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4

Professional Position

Average 

Billing

Rate

Total

Hours

Total

Fees

Gumbs, Sean Senior Managing Director $ 1,057 214.0 $ 226,100.00 

Isler, Jeffrey Senior Managing Director 395 3.8 1,501.00 

Malloy, Michael Senior Managing Director 815 47.5 38,712.50 

Simms, Steven Senior Managing Director 1,057 25.5 26,952.50 

Tully, Conor Senior Managing Director 995 6.5 6,467.50 

Grunwald Kadar, Andrea Managing Director 915 122.3 111,904.50 

Heeren, Ana Managing Director 650 2.2 1,430.00 

Leonard, Jeffrey Managing Director 685 4.2 2,877.00 

Mulkeen, Tara Managing Director 705 97.9 69,019.50 

Park, Ji Yon Managing Director 841 187.6 157,770.00 

Robertson, David Managing Director 629 17.8 11,200.00 

Whitcomb, John Senior Director 600 10.0 6,000.00 

Mossop, Julian Senior Consultant 546 335.3 183,140.00 

Williams, Sian Senior Consultant 275 16.1 4,427.50 

Cherian, Ritika Consultant 300 253.4 76,020.00 

Emerton, Charlie Consultant 380 138.8 52,744.00 

Fazal, Kazi Consultant 455 58.0 26,390.00 

Miles, Edan Consultant 315 174.9 55,093.50 

Sombuntham, Natalie Consultant 397 179.5 71,275.00 

Hellmund-Mora, Marili Associate 266 45.0 11,977.00 

SUBTOTAL 1940.3 1,141,001.50 

Less: 50% discount for non-working travel time (13,730.00)

GRAND TOTAL 1940.3 $ 1,127,271.50 

(1): Professionals subject to annual billing rate increase effective January, 2018

(1)

(1)

(1)

(1)

(1)

(1)

(1)

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Hearing Date: June 6, 2018 at 9:30 a.m. AST

Objection Deadline: April 9, 2018 (for parties other than the Fee Examiner)

IN THE UNITED STATES DISTRICT COURT

FOR THE 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)

SECOND INTERIM APPLICATION OF FTI CONSULTING, INC. 

FOR ALLOWANCE OF COMPENSATION FOR SERVICES 

RENDERED AND REIMBURSEMENT OF EXPENSES INCURRED AS 

FINANCIAL ADVISOR TO THE OFFICIAL COMMITTEE OF RETIRED 

EMPLOYEES OF THE COMMONWEALTH OF PUERTO RICO

FROM OCTOBER 1, 2017 THROUGH JANUARY 31, 2018

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

FTI Consulting, Inc. (“FTI”), financial advisor for The Official Committee of Retired 

Employees of the Commonwealth of Puerto Rico (the “Retiree Committee”) in the abovecaptioned Title III cases (the “Title III Cases”), hereby submits this second application 

1

The Debtors in these jointly-administered PROMESA 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: (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 (Bankruptcy Case No. 17 BK 3284) (Last Four Digits of Federal Tax ID: 

8474); (iii) Puerto Rico Highways and Transportation Authority (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 (Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax 

ID: 9686); and (v) Puerto Rico Electric and Power Authority (Bankruptcy Case No. 17 BK 4780) (Last 

Four Digits of Federal Tax ID: 3747).

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2

(“Application”) for allowance of compensation for professional services rendered, and 

reimbursement for actual and necessary expenses incurred in connection with such services, for 

the period from October 1, 2017 through January 31, 2018 (the “Interim Period”). FTI submits 

this Application pursuant to sections 316 and 317 of the Puerto Rico Oversight, Management, and 

Economic Stability Act (“PROMESA”),2

48 U.S.C. §§ 2176, 2177; sections 105(a) and 503(b) of 

the Bankruptcy Code,3 11 U.S.C. § 503(b); Rule 2016(a) of the Federal Rules of Bankruptcy 

Procedure (the “Bankruptcy Rules”)4

; Rule 2016-1 of the Bankruptcy Rules for the United States 

Bankruptcy Court for the District of Puerto Rico (the “Local Rules”)5

; the Court’s Order 

Authorizing the Employment of FTI Consulting, Inc. as Financial Advisor for the Committee of 

Retired Employees (“Retention Order”) [Dkt. No. 1413]; the Court’s First Amended Order 

Setting Procedures for Interim Compensation and Reimbursement of Expenses of Professionals

(“Interim Compensation Order”) [Dkt. No. 1715]; the United States Trustee’s Guidelines for 

Reviewing Applications for Compensation and Reimbursement of Expenses Filed Under 11 U.S.C. 

§ 330 by Attorneys in Large Chapter 11 Cases Effective as of November 1, 2013 (the “UST 

Guidelines”); and the Fee Examiner’s November 10, 2017 Memorandum (the “Fee Examiner 

Memorandum”). In support of the Application, FTI submits the Certification of Sean A. Gumbs 

(the “Gumbs Certification”), attached hereto as Exhibit A, and respectfully represents as follows: 

2

PROMESA is codified at 48 U.S.C. §§ 2101–2241.

3

The Bankruptcy Code is codified at 11 U.S.C. §§ 101–1532. Unless otherwise noted, all Bankruptcy Code 

sections cited in the Application are made applicable to these Title III Cases pursuant to section 301(a) of 

PROMESA. 

4

All Bankruptcy Rules referenced in this Application are made applicable to these Title III Cases pursuant 

to section 310 of PROMESA.

5

The Local Rules are made applicable here by the Court’s Order (A) Imposing and Rendering Applicable 

Local Bankruptcy Rules to These Title III Cases, (B) Authorizing Establishment of Certain Notice, Case 

Management, and Administrative Procedures, and (C) Granting Related Relief [Dkt. No. 249].

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3

Preliminary Statement

1. FTI provided services to the Retiree Committee in accordance with the instructions 

and directions of the Retiree Committee and its counsel. The Retiree Committee represents 

approximately 167,000 retired employees of the Commonwealth and various governmental bodies 

and their surviving beneficiaries, including Puerto Rico’s retired teachers, police officers, 

firefighters, judges, municipal clerks, engineers, and other government workers of all categories 

(the “Retirees”). The Retirees’ pensions are underfunded by at least $49 billion. They are the 

largest group of creditors in these Title III Cases. 

2. During the Interim Period, FTI performed a variety of financial advisory services that 

were necessary and appropriate for the efficient and economical advancement of the Retiree 

Committee’s interests in the Title III Cases, including, among other things: performing in-depth 

diligence of the certified Fiscal Plan and the key underlying assumptions; analyzing proposed 

modifications to Retiree’s pension, healthcare and other benefits and the economic impact related 

thereto; meeting and conferring with the Retiree Committee, its counsel and actuarial consultants 

on key case issues impacting Retirees; attending court hearings and participating in mediation 

sessions involving matters pertaining to the benefits of the Retirees; monitoring key case 

developments in the island, including update on various on-going litigations, hurricane aid status, 

and other on-island news; and analyzing the impact of hurricane Maria on the island, including 

macroeconomic impact. 

3. FTI’s work during the Interim Period was necessary for, and beneficial to, the Retirees 

and served to ensure that the interests of the Retirees were properly represented and safeguarded 

in these Title III Cases. FTI is compensated on an hourly fee basis, plus reimbursement of actual 

and necessary expenses incurred by FTI. 

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4

4. By this Application, FTI seeks allowance of (i) compensation for actual and necessary 

professional services rendered by FTI as financial advisor to the Retiree Committee for the Interim 

Period in the amount of $1,127,271.50 and (ii) reimbursement for actual and necessary expenses 

incurred in the Interim Period in the amount of $21,853.96, for a total of $1,149,125.46 for the 

Interim Period.

5. This Application summarizes the services rendered by FTI on behalf of the Retiree 

Committee during the Interim Period. While it is not possible or practical to describe each and 

every activity undertaken by FTI, FTI has maintained contemporaneous time records which 

include a detailed chronology of the daily services rendered, describing the precise nature of the 

work, the specific tasks performed, and the time expended by each professional. A breakdown of 

the hours and fees by professional is annexed hereto as Exhibit B. A breakdown of the hours and 

fees by task code is annexed hereto as Exhibit C. A detailed copy of the time records for the 

Interim Period is annexed hereto as Exhibit D.

6. FTI has incurred out-of-pocket disbursements during the Interim Period broken down 

into categories of charges itemized in Exhibit E. A detailed breakdown of these charges is annexed 

hereto as Exhibit F. Each charge incurred by FTI was necessary and reasonable, and was incurred 

as a direct result of FTI’s representation of the Retiree Committee.

7. In accordance with the Interim Compensation Order, FTI has requested payment for 

90% of the fees for actual and necessary legal services incurred during the Interim Period in the 

amount $1,014,544.35 and for 100% of the expenses incurred during the Interim Period in the 

amount of $21,853.96 for a total payment amount of $1,036,398.31. 

8. As of the date of this Application, FTI is owed $1,058,711.05 for professional fees 

and $17,916.58 for actual and necessary expenses for a total of $1,076,627.63. 

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5

Jurisdiction

9. The United States District Court for the District of Puerto Rico (the “Court”) has 

subject matter jurisdiction over this matter pursuant to PROMESA section 306(a).

10. Venue is proper pursuant to PROMESA section 307(a).

11. FTI makes this Application pursuant to PROMESA sections 316 and 317, Bankruptcy 

Code sections 105(a) and 503(b), Bankruptcy Rule 2016, Local Rule 2016-1, the Retention Order, 

the Interim Compensation Order, and the UST Guidelines. 

Background

12. On May 3, 2017, the Commonwealth of Puerto Rico (the “Commonwealth”), by and 

through the Financial Oversight and Management Board for Puerto Rico (the “FOMB”), as the 

Commonwealth’s representative pursuant to section 315(b) of PROMESA, filed a petition with 

the Court under title III of PROMESA.

13. On May 5, 2017, the Puerto Rico Sales Tax Financing Corporation (“COFINA”), by 

and through the FOMB, as COFINA’s representative pursuant to PROMESA section 315(b), filed 

a petition with the Court under title III of PROMESA.

14. On May 21, 2017, the Puerto Rico Highways and Transportation Authority (“HTA”), 

by and through the FOMB, as HTA’s representative pursuant to PROMESA section 315(b), filed 

a petition with the Court under title III of PROMESA.

15. On May 21, 2017, the Employees Retirement System for the Commonwealth of Puerto 

Rico (“ERS”), by and through the FOMB, as ERS’s representative pursuant to PROMESA section 

315(b), filed a petition with the Court under title III of PROMESA.

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6

16. On July 3, 2017, the Puerto Rico Electric Power Authority (“PREPA”), by and 

through the FOMB, as PREPA’s representative pursuant to PROMESA section 315(b), filed a 

petition with the Court under title III of PROMESA.

17. Through Orders of this Court, the Commonwealth, COFINA, HTA, ERS, and PREPA 

Title III Cases are jointly administered for procedural purposes only, pursuant to PROMESA 

section 304(g) and Bankruptcy Rule 1015. [See Dkt. Nos. 242, 537, 1417.]

18. On June 15, 2017, the U.S. Trustee, pursuant to section 1102(a)(1) of the Bankruptcy 

Code, appointed the Retiree Committee, consisting of the following nine individuals: Blanca 

Paniagua, Carmen Nunez, José Marin, Juan Ortiz, Lydia Pellot, Marcos A. Lopez, Miguel Fabre, 

Milagros Acevedo, and Rosario Pacheco. [Dkt. No. 340.]

FTI’s Retention and Fee Request

19. On June 27, 2017, the Retiree Committee selected FTI as its financial advisor. On 

August 4, 2017, the Retiree Committee filed its Application for an Order Approving the 

Employment of FTI Consulting, Inc. (the “Retention Application”) [Dkt. No. 877] pursuant to 

section 105(a) and 1103 of the Bankruptcy Code.6

20. On October 6, 2017, the Court entered the Retention Order [Dkt. No. 1413] approving 

FTI’s retention as financial advisor to the Retiree Committee, effective June 27, 2017, on the terms 

and conditions identified in the Retention Application. Pursuant to the Retention Order, FTI is 

entitled to compensation on an hourly fee basis for reasonable, actual, and necessary professional 

services rendered and reimbursement of expenses incurred in connection with the Title III Cases.

6

In a chapter 11 case, a committee appointed under section 1102 of the Bankruptcy Code ordinarily would 

seek authority to employ counsel pursuant to section 328. Because PROMESA does not incorporate section 

328 of the Bankruptcy Code, the Retiree Committee moved for approval of its Retention Application 

pursuant to sections 105(a) and 1103(a). See PROMESA § 301(a) (omitting Bankruptcy Code sections 327 

and 328 from incorporation into PROMESA).

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21. On October 6, 2017, the Court entered an Order appointing Brady Williamson as the 

fee examiner (the “Fee Examiner”) in these Title III Cases. [Dkt. No. 1416.]

22. On December 15, 2017, FTI filed its First Interim Application for Allowance of 

Compensation for Services Rendered and Reimbursement of Expenses Incurred From June 16, 

2017 Through September 30, 2017 (the “First Interim Application”) [Dkt. No. 2051], seeking 

$660,431.00 in compensation and $5,298.34 in expenses. On March 7, 2018, the Court entered an 

Order approving the First Interim Application (the “First Interim Order”) [Dkt. No. 2685] in the 

amount of $658,246.00 in compensation and $5,072.35 in expenses, reflecting certain reductions 

recommended by the Fee Examiner and agreed to by Jenner. Payment is due, but has not been 

made by AAFAF, for $63,632.11 approved in the First Interim Order.

23. FTI has received 90% of the fees requested and 100% of the expense reimbursement 

requested in its October 2017 monthly statements, for $134,603.55 in compensation and $3,937.38 

in expenses. Payment is due, but has not been made by AAFAF, for 90% of the fees requested 

and 100% of the expense reimbursement requested in FTI’s November 2017, December 2017, and 

January 2018 monthly statements. 

24. FTI’s fees are based upon hours charged, recorded in tenth of an hour increments, at 

FTI’s ordinary and customary hourly rates in effect as of January 1 of the calendar year in which 

the services are rendered, plus reimbursement of actual, necessary out-of-pocket expenses and 

other charges incurred by FTI on behalf of the Retiree Committee. FTI periodically adjusts its 

rates, generally at the start of each calendar year. 

25. The cover sheet to this Application contains a schedule setting forth all FTI 

professionals who have performed services in the Title III Cases during the Interim Period, the 

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position of each individual, the hourly billing rate charged for services performed by such 

individual, the aggregate number of hours expended in this case and fees billed therefore. 

26. By this Application, FTI seeks allowance of compensation in the amount of 

$1,127,271.50 and reimbursement of expenses in the amount of $21,853.96. As of the date of this 

Application, FTI has received compensation in the amount of $134,603.55 and reimbursement of 

$3,937.38 of expenses for the Interim Period.

27. This is FTI’s second request for interim compensation in these Title III Cases. As set 

forth in the Gumbs Certification, all of the services for which interim compensation is sought 

herein were rendered for and on behalf of the Retiree Committee in connection with these Title III 

Cases. To the best of FTI’s knowledge and as disclosed in the Declaration Of Steven Simms In 

Support Of Application of the Official Committee of Retired Employees of the Commonwealth of 

Puerto Rico for Order Approving the Employment of FTI Consulting, Inc.[Dkt. No. 877-2] (the 

“Simms Declaration”), FTI is a “disinterested person” as defined in section 101(14) of the 

Bankruptcy Code, although not required by PROMESA, and except as otherwise specified in the 

Simms Declaration, FTI’s professionals do not hold or represent any interest adverse to the Retiree 

Committee.

28. FTI has in the past represented, may currently represent, and likely in the future will 

represent parties in interest in the Title III Cases in connection with matters unrelated to the Retiree 

Committee or the Title III Cases. In the Simms Declaration, FTI disclosed its connections to 

parties in interest in the Title III Cases that it has been able to ascertain using its reasonable efforts. 

FTI will update such disclosures, as appropriate, if FTI becomes aware of relevant and material 

new information.

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29. FTI performed the services for which it is seeking compensation on behalf of the 

Retiree Committee and not on behalf of any other committee, creditor, or other entity.

30. FTI has not received payment or promise of payment from any source other than the 

Commonwealth, for its services rendered and expenses incurred on behalf of the Retiree 

Committee in connection with the Title III Cases. 

31. FTI does not share fees with any professionals except to the extent permitted by 

section 504 of the Bankruptcy Code. 

Summary of Financial Advisory Services Provided During the Interim Period

32. The Title III cases have presented numerous large and complex issues that had to be 

addressed in order to maximize value for retiree constituents. The Retention Order authorized FTI 

to render financial advisory services to the Retiree Committee. 

33. FTI has taken reasonable steps to avoid duplication of services by FTI’s professionals. 

During the course of the Interim Period, there have been a few instances where more than one FTI 

professional attended a hearing or conference. These multiple attendees were necessary to 

accomplish the significant amount of work which needed to be performed in a compressed amount 

of time involving complex facts and transactions and the participation and involvement of multiple 

attendees to divide up the work was necessary under the circumstances.

34. FTI has established, in accordance with its internal billing procedures, subject matters 

categories (each, a “Matter Category”) for keeping time records of the work performed for the 

Retiree Committee. A summary of the time incurred by professional and by Matter Category is 

attached hereto as Exhibit B and Exhibit C. In addition, subject to redaction for attorney-client 

privilege, attorney work product, and confidentiality where necessary to protect the Retiree 

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Committee, FTI’s records of time worked providing professional services to the Retiree 

Committee are attached hereto as Exhibit D.

35. The primary services rendered by FTI include, but are not limited to, the Matter 

Categories set forth below. 

1. Current Operating Results & Events

Fees: $68,957.00 Total Hours: 115.6

36. FTI analyzed current news and events related to and impacting Puerto Rico, the 

Retirees, and these Title III cases. The time entries in this category include reviewing court filings, 

monitoring news articles relating to key developments in Puerto Rico and the Title III cases, and 

reviewing public materials released by the Oversight Board and the government. Time spent in 

this task code was critical for FTI to keep apprised of the latest case developments with respect to 

on-island issues, various ongoing litigations, hurricane impact / relief efforts, and follow up from 

the mediation sessions. 

2. Cash & Liquidity Analysis

Fees: $46,533.50 Total Hours: 72.5

37. FTI reviewed and analyzed the liquidity status and projections of the Commonwealth. 

FTI’s work included analysis of AAFAF weekly TSA cash flow reports, Commonwealth bank 

account reconciliation reports, and other documents posted to the AAFAF data room. FTI 

developed follow up questions for upcoming calls and also dialed into public hearings on liquidity 

presented by AAFAF in order to better understand the liquidity projections and assumptions. This 

effort was crucial to understanding the liquidity situation of the Commonwealth, particularly in 

light of the Hurricanes and the impact on the island. 

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3. Mediation

Fees: $127,707.50 Total Hours: 143.6

38. The time spent in this category reflects preparation for and participation in the 

confidential mediation process on behalf of the Retiree Committee in the Title III cases. 

4. Analysis of the Fiscal Plan – Revenues

Fees: $58,527.50 Total Hours: 80.9

39. FTI performed detailed review and analysis of the base revenue projections in the 

Fiscal Plan model and analyzed various supporting materials provided by the Commonwealth’s 

advisors. Analysis of Fiscal Plan revenue included review of the underlying macroeconomic 

assumptions used, how they apply to various revenue line items in the Fiscal Plan, and how they 

flow into the component unit forecasts, such as the HTA and the University of Puerto Rico. FTI 

also reviewed the revised Fiscal Plan issued on January 24, 2018, to understand key changes and 

follow-up questions. 

5. Analysis of the Fiscal Plan – Expenses

Fees: $7,706.00 Total Hours: 12.1

40. FTI performed review and analysis of the base expense projections in the Fiscal Plan 

model and analyzed various supporting materials provided by the Commonwealth’s advisors. FTI 

reconciled the Fiscal Plan model to the supporting files that built up to the expense projections and 

evaluated each of the Commonwealth component units’ cash flows. FTI reviewed the assumptions 

behind the Fiscal Plan’s treatment of pension expenses, healthcare, and utilities as well as the 

expenses of key component units. FTI also bridged key differences in expenses between versions 

of the Fiscal Plan models, including the revised Fiscal Plan dated January 24, 2018, and identified 

follow up questions and information requests on the baseline expense projections. 

6. Analysis of the Fiscal Plan – Revenue Measures

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Fees: $6,673.00 Total Hours: 11.4

41. FTI performed review and analysis of the revenue measures proposed by the Fiscal 

Plan, the related impact in the Fiscal Plan model, and various supporting materials provided by the 

Commonwealth’s advisors. FTI reviewed documents underlying the Commonwealth’s Revenue 

Measures, including information supporting changes to corporate income tax, improved tax 

compliance, and other revenue enhancements, and analyzed key changes in measures from 

previous versions of the Fiscal Plan to the revised Fiscal Plan dated January 24, 2018. FTI also 

identified follow up questions and information requests on the revenue measures.

7. Analysis of the Fiscal Plan – Expense Measures 

Fees: $10,936.50 Total Hours: 22.4

42. FTI performed review and analysis of the expense measures proposed by the Fiscal 

Plan, the related impact in the Fiscal Plan model, and various supporting materials provided by the 

Commonwealth’s advisors. FTI assessed the reductions to government spending contemplated in 

the Fiscal Plan model, such as right sizing the government, reducing subsidies to the University of 

Puerto Rico and other subsidiaries, reduction of healthcare spending, and reduction of pension 

expenses. FTI also analyzed key changes in expense measures in the revised Fiscal Plan dated 

January 24, 2018, and developed a list of questions and follow up items. 

14. Analysis of Claims/Liabilities Subject to Compromise 

Fees: $159,350.50 Total Hours: 228.5

43. Time spent in this category includes analysis of claims and liabilities subject to 

compromise in these Title III cases, including certain bonded debt. FTI performed in-depth 

analyses of COFINA bond issuances, including analysis of the COFINA’s authorization to issue 

bonds and review of the sources and uses of COFINA funds. FTI reviewed public financial 

statements and offering statements, analyzed various issuances of debt in Puerto Rico’s capital 

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structure, researched various relevant issues, and developed an analysis for counsel’s review. In 

addition, FTI analyzed government accounting issues with respect to sales and use tax collections 

and prepared an expert report.

17. Analysis of Pension and Retiree Related Liabilities

Fees: $106,386.50 Total Hours: 147.1

44. Time spent in this category includes analysis of the proposed pension reform 

contemplated in the Fiscal Plan and the resulting pension liabilities. FTI also created a report 

providing an overview of Puerto Rico’s retirees to be used in meetings with government officials. 

FTI analyzed the Fiscal Plan’s modeling of the PayGo obligations and impact of the pension 

reforms. FTI reviewed the key underlying assumptions utilized to project pension liabilities in the 

PayGo model, evaluated the different components and build-up of pension expenses, performed 

variance analysis on the revised Fiscal Plan which contemplates a revised pension reform 

framework, compared pension obligations per the Fiscal Plan to actuarial obligations, and 

evaluated the effects of pension reform on retirees. FTI participated in numerous discussions with 

the Retiree Committee’s actuarial consultants, Segal, to ensure our review and approach were 

coordinated and to share our findings and analysis. 

18. General Meetings with Retiree Committee & Committee Professionals

Fees: $42,893.00 Total Hours: 49.6

45. Time spent in this category reflects participating in meetings and discussions with the 

Retiree Committee regarding latest case updates, including updates on Fiscal Plan diligence, 

ongoing litigation, proposed pension reforms, hurricane aid, upcoming court hearings, and other 

relevant case issues. FTI also participated in regular conference calls with the Retiree Committee’s 

advisors to coordinate efforts, share information, discuss latest case developments and strategy, 

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update on Fiscal Plan and related diligence, preparation for committee meetings and relevant 

issues. 

27. Strategic Communications

Fees: $44,483.00 Total Hours: 70.2

46. Time entries in this category relate to preparing for and participating in meetings with 

government officials in Washington, D.C. on behalf of the Retiree Committee. FTI created a 

discussion handout providing an overview of Puerto Rico’s retirees to be used in the meetings with 

officials.

28. Analysis of the Fiscal Plan – Economic Review 

Fees: $328,517.00 Total Hours: 761.8

47. Time spent in this category reflects analysis of the Fiscal Plan’s macroeconomic 

assumptions, review of supporting macroeconomic studies used to develop the assumptions, 

assessment of the application of macroeconomic drivers in the Fiscal Plan, evaluation of interrelationship impacts of revenue and expense measures on various aspects of the economy, and 

research of past case studies. As part of the economic review, FTI performed detailed analysis on 

key macroeconomic drivers (GNP growth, inflation, population growth, and macroeconomic 

multiplier) and their interactions with the Fiscal Plan by line item, evaluated the macroeconomic 

studies cited by the Commonwealth, developed detailed due diligence requests to vet the 

methodology, and researched historical macroeconomic data of past comparable case studies to 

evaluate the reasonableness of the Fiscal Plan assumptions and methodology. FTI’s work also 

included detailed analysis of the projected economic impact of hurricanes Irma and Maria, 

including research on the impact of natural disasters on other economies. 

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Actual and Necessary Expenses Incurred by FTI During the Interim Period

48. FTI incurred actual out-of-pocket expenses in connection with the rendering of 

professional services to the Retiree Committee during the Interim Period in the amount of 

$21,853.96, for which FTI respectfully requests reimbursement in full. The disbursements and 

expenses have been incurred in accordance with FTI’s normal practice of charging clients for 

expenses clearly related to and required by particular matters. A categorized summary of the actual 

and necessary costs and expenses incurred by FTI during the Interim Period, and an itemization of 

each expense within each category, is attached hereto as Exhibit E and Exhibit F, respectively.

FTI’s Requested Compensation and Reimbursement Should be Allowed

49. The services for which FTI seeks compensation in this Application were, at the time 

provided, necessary for and beneficial to the Retiree Committee. FTI performed these services 

economically, effectively, and efficiently, and they benefited the Retiree Committee. The 

expenses incurred were as a direct result of FTI’s representation of the Retiree Committee and are 

the type customarily charged to non-bankruptcy clients of FTI. FTI respectfully submits that the 

compensation and reimbursement requested are reasonable in light of the nature, extent, and value 

of such services to the Retiree Committee. Accordingly, FTI submits the compensation sought in 

this Application is warranted and should be approved.

Reservation of Rights and Notice

50. It is possible that some professional time expended or expenses incurred during the 

Interim Period are not reflected in the Application, as such time or expenses may not have been 

captured in FTI’s billing system on the date of filing this Application. FTI reserves the right to 

include such amounts in future fee applications. 

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51. Pursuant to the Interim Compensation Order, the Retiree Committee has provided 

notice of this Application to: (a) the U.S. Trustee; (b) counsel to the FOMB; (c) counsel to 

AAFAF; (d) counsel to the UCC; (e) the Fee Examiner; and (f) all parties that have filed a notice 

of appearance with the Clerk of this Court, pursuant to Bankruptcy Rule 2002 and applicable 

provisions of the Local Rules, and requested such notice.

No Prior Request

52. No prior application for the relief requested by this Application has been made to this 

or any other court. 

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WHEREFORE, FTI respectfully requests that the Court enter an order: (a) awarding FTI 

compensation for professional and paraprofessional services provided during the Interim Period 

in the amount of $1,127,271.50; (b) reimbursement of actual, reasonable and necessary expenses 

incurred in the Interim Period in the amount of $21,853.96; and (c) granting such other relief as 

is appropriate under the circumstances. 

Dated: March 19, 2018 Respectfully submitted,

FTI CONSULTING, INC.

/s/ Steven D. Simms 

Steven D. Simms

Sean A. Gumbs

Three Times Square, 9th Floor

New York, NY, 10036

steven.simms@fticonsulting.com

sean.gumbs@fticonsulting.com

Financial Advisors for The Official 

Committee of Retired Employees of Puerto 

Rico

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