Hearing Date: November 7, 2018 at 9:30 a.m. AST 

Objection Deadline: August 6, 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 THIRD 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 FEBRUARY 1, 2018 

THROUGH MAY 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: February 1, 2018 through May 31, 

2018 

Monthly Fee Statements subject to the request: February 2018—May 2018 

Total compensation sought this period: $ 1,877,094.50 

Total expenses sought this period: $ 18,368.45 

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: $ 1,761,963.11 

Total expenses approved by interim order to date: $ 10,480.70 

Total compensation paid to date: $ 1,834,935.81 

Total expenses paid to date: $ 32,810.33 

Total compensation subject to objection: None 

Total expenses subject to objection: None 

Blended rate in this application for all professionals: $ 624.99 

Number of Professionals Included in this Application: 29

Difference Between Fees Budgeted and Compensation 

Sought: Not Applicable 

Number of Professionals Billing Fewer than 15 Hours 

to this Case: 8 

Rates Higher than Those Disclosed at Retention: FTI adjusted some professionals’ 

hourly rates to be reflective of 

promotions and other periodic rate 

adjustments as of April 1, 2018. 

All time recorded in April and 

May 2018 is at the current rates, 

which are reflected herein. 

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

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3 

This is an interim application. 

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

approximately 148.5 hours and the corresponding compensation requested is approximately 

$73,373.50. 

Objection Deadline: August 6, 2018 (for parties other 

than the Fee Examiner) 

 

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4 

SUMMARY OF HOURS BY PROFESSIONAL

FOR THE PERIOD FEBRUARY 1, 2018 TO MAY 31, 2018

Mainland Fees On-island Fees Total Fees

Professional Position

Blended 

Billing Rate Hours Fees Hours Fees

Total

Hours

Total

Fees

Gibson, Wayne Senior Managing Director $ 695 7.2 $ 5,004.00 - $ - 7.2 $ 5,004.00 

Gumbs, Sean Senior Managing Director 1,075 360.8 387,860.00 20.5 22,037.50 381.3 409,897.50 

Malloy, Michael Senior Managing Director 815 44.1 35,941.50 - - 44.1 35,941.50 

Simms, Steven Senior Managing Director 1,075 19.8 21,285.00 - - 19.8 21,285.00 

Smith, Ellen Senior Managing Director 1,020 8.0 8,160.00 - - 8.0 8,160.00 

Smith, Lawrence Senior Managing Director 910 1.0 910.00 - - 1.0 910.00 

Maddox, Brian Senior Managing Director I 850 0.6 510.00 - - 0.6 510.00 

Fish, Mark Managing Director 675 11.5 7,762.50 - - 11.5 7,762.50 

Grunwald Kadar, Andrea Managing Director 915 232.2 212,463.00 2.5 2,287.50 234.7 214,750.50 

Heeren, Ana Managing Director 700 30.6 21,420.00 - - 30.6 21,420.00 

Mulkeen, Tara Managing Director 705 68.6 48,363.00 - - 68.6 48,363.00 

Park, Ji Yon Managing Director 855 315.6 269,838.00 - - 315.6 269,838.00 

Robertson, David Managing Director I 700 1.0 700.00 - - 1.0 700.00 

Lee, Calvin Senior Director 765 123.0 94,095.00 - - 123.0 94,095.00 

LaMagna, Matthew Director 450 1.5 675.00 - - 1.5 675.00 

Chu, Josephine Senior Consultant 455 75.7 34,443.50 - - 75.7 34,443.50 

Emerton, Charlie Senior Consultant 453 189.6 85,952.00 - - 189.6 85,952.00 

Leese, Nicholas Senior Consultant 495 67.8 33,527.50 - - 67.8 33,527.50 

Mossop, Julian Senior Consultant 580 236.0 136,880.00 - - 236.0 136,880.00 

Sombuntham, Natalie Senior Consultant 493 533.0 262,517.00 - - 533.0 262,517.00 

Garcia Pelaez, Andres Senior Consultant I 394 27.7 10,900.00 - - 27.7 10,900.00 

Mann, Sarah Senior Consultant I 350 1.3 455.00 - - 1.3 455.00 

Cherian, Ritika Consultant 304 135.8 41,334.00 - - 135.8 41,334.00 

Elliott, Charles Consultant 312 134.3 41,844.00 - - 134.3 41,844.00 

Locke, William Consultant 200 27.2 5,440.00 - - 27.2 5,440.00 

Maassen, Thomas Consultant 350 121.7 42,546.00 - - 121.7 42,546.00 

Miles, Edan Consultant 315 89.0 28,059.50 - - 89.0 28,059.50 

Teixeira, Anabel Consultant I 250 72.3 18,075.00 - - 72.3 18,075.00 

Hellmund-Mora, Marili Associate 270 43.5 11,745.00 - - 43.5 11,745.00 

SUBTOTAL $ 1,868,705.50 2,980.4 23.0 $ 24,325.00 3,003.4 $ 1,893,030.50 

Less: 50% discount for non-working travel time - (15,936.00) (15,936.00) 

TOTAL BEFORE WITHHOLDING $ 1,852,769.50 2,980.4 23.0 $ 24,325.00 3,003.4 $ 1,877,094.50 

Less: 7% withholding on on-island fees (1,702.75) - (1,702.75) 

GRAND TOTAL $ 1,852,769.50 2,980.4 23.0 $ 22,622.25 3,003.4 $ 1,875,391.75 

(1): Professionals who were promoted during the Third Interim Fee Application period.

(2): Professionals whose rates were subject to periodic increases during the Third Interim Fee Application period.

(1)

(1)

(2)

(2)

(2)

(2)

(2)

(2)

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Hearing Date: November 7, 2018 at 9:30 a.m. AST 

Objection Deadline: August 6, 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) 

THIRD 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 FEBRUARY 1, 2018 THROUGH MAY 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 third 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 February 1, 2018 through May 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 Court’s Second Amended Order Setting 

Procedures for Interim Compensation and Reimbursement of Expenses of Professionals (“Second

Interim Compensation Order”) [Dkt. No. 3269]; 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 

 

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 

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: 

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 approximately $58 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 multiple fiscal plans issued 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 updates on various on-going litigations, hurricane aid status, 

and other on-island news; monitoring the mainland media coverage of the case, as well as 

developing media communications strategies in coordination with the Retiree Committee’s local 

communications advisors; and engaging in mediation discussions, including, but not limited to, 

confidential settlement negotiations with various constituencies. 

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4 

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. 

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 $1,877,094.50 and (ii) reimbursement for actual and necessary expenses 

incurred in the Interim Period in the amount of $18,368.45, for a total of $1,895,462.95 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 and by location of work performed is annexed hereto as Exhibit 

B. A breakdown of the hours and fees by task code and by location of work performed is annexed 

hereto as Exhibit C. A detailed copy of the time records of work performed on the mainland for 

the Interim Period is annexed hereto as Exhibit D. A detailed copy of the time records of work 

performed on the island for the Interim Period is annexed hereto as Exhibit E. 

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

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

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

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

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5 

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 $1,689,385.05 and for 100% of the expenses incurred during the Interim Period in the 

amount of $18,368.45 for a total payment amount of $1,707,753.50. 

8. As of the date of this Application, FTI is owed $1,748,181.90 for professional fees6

and $12,710.42 for actual and necessary expenses for a total of $1,796,892.32. The government 

erroneously applied a 29% withholding taxes to fees incurred by FTI in November 2017, 

December 2017, January 2018, February 2018, and March 2018, as well as to the holdback fees 

from FTI’s First Interim Fee Application. FTI has made a formal request upon the government to 

correct this error. FTI reserves all rights to dispute the amount of taxes withheld from the payment 

of this Fee Application and any other Fee Statements and Fee Applications. 

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 

 

6

 Professional fees owed are net of 7% withholding taxes of $3,268.30 on fees incurred on the island during 

the First Interim Period of $22,365.00 and the Third Interim Period of $24,325.00. No on-island fees were 

incurred during the Second Interim Period. 

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6 

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. 

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, Juan Ortiz, Lydia Pellot, Marcos A. Lopez, Miguel Fabre, Milagros 

Acevedo, Rosario Pacheco, and José Marin7

. [Dkt. No. 340.] 

 

7

 José Marin resigned from the Retiree Committee effective April 12, 2018. 

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7 

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.8 

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. 

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 FTI. Payment of $63,632.11 of holdback as 

approved in the First Interim Order was only partially paid by the Commonwealth government, as 

 

8

 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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8 

the government erroneously applied a 29% withholding taxes. Payment of $16,887.76 is still due, 

assuming 7% withholding taxes applied to fees incurred on-island ($22,365.00). 

23. On March 19, 2018, FTI filed its Second Interim Application for Allowance of 

Compensation for Services Rendered and Reimbursement of Expenses Incurred From October 1, 

2017 Through January 31, 2018 (the “Second Interim Application”) [Dkt. No. 2740], seeking 

$1,127,271.50 in compensation and $21,853.96 in expenses. On June 8, 2018, the Court entered 

an Order approving the Second Interim Application (the “Second Interim Order”) [Dkt. No. 

3279] in the amount of $1,103,717.11 in compensation and $5,408.35 in expenses, reflecting 

certain reductions recommended by the Fee Examiner and agreed to by FTI. Payment of 

$72,727.15 of holdback and $255,182.83 of erroneously withheld taxes, for a total of $327,909.98, 

are due, but has not been made by the government. For November 2017, December 2017 and 

January 2018, the government erroneously applied a 29% withholding taxes to the 90% fee 

payments. As none of the fees incurred by FTI during the Second Interim Period was incurred onisland, there should not be any withholding taxes. 

24. For the Third Interim Period, FTI has received 64% of the fees requested and 100% 

of the expense reimbursements requested in it February 2018 and March 2018 monthly statements. 

The government erroneously applied a 29% withholding taxes to the 90% fee payments for these 

months. No payments have been received for April 2018 and May 2018 monthly statements. In 

total, payment of $1,452,094.58 is still due, comprised of (i) $68,232.80 of holdback for February 

2018 and March 2018, (ii) $176,384.86 of erroneously withheld taxes for February 2018 and 

March 2018 ($178,087.61) less 7% withholding taxes for on-island fees incurred during the Third 

Interim Period ($1,702.75), and (iii) $1,207,476.92 of fees and expense reimbursement for April 

2018 and May 2018. 

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9 

25. 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. 

26. 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 

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. 

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

$1,877,094.50 and reimbursement of expenses in the amount of $18,368.45. As of the date of this 

Application, FTI has received compensation in the amount of $436,007.59 and reimbursement of 

$5,658.03 of expenses for the Interim Period. 

28. This is FTI’s third 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. 

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10 

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

represent parties in interest in these 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. 

30. 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. 

31. 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. 

32. 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 

33. 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. 

34. 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. 

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11 

35. 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 

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

Committee are attached hereto as Exhibit D. 

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

Categories set forth below. 

1. Current Operating Results & Events 

Fees: $68,359.50 

Total Hours: 117.6 

37. 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, the government, and other parties. 

Time spent in this task code was critical for FTI to keep apprised of the latest case developments 

with respect to on-island issues, the island’s financial performance, various ongoing litigations, 

settlement discussions, hurricane impact / relief efforts, and follow up from the mediation sessions. 

 3. Mediation 

Fees: $519,562.00 ($9,460.00 of which was incurred on-island) 

Total Hours: 654.7 (8.8 of which was incurred on-island) 

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. 

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4. Analysis of the Fiscal Plan – General / Revenues 

Fees: $165,395.50 ($2,687.50 of which was incurred on-island) 

Total Hours: 235.6 (2.5 of which was incurred on-island) 

39. FTI performed detailed review and analysis of the five different Fiscal Plans, as well 

as the accompanying models and various supporting materials, published over the course of the 

Interim Period by the Commonwealth and the Oversight Board. FTI reviewed the key assumptions 

used in each of the five different Fiscal Plans, such as federal recovery funding and population 

growth trends, to understand key changes and performed detailed variance analyses that were later 

presented to the Retiree Committee. 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 analyzed the modeling methodology of SUT collections. 

5. Analysis of the Fiscal Plan – Expenses 

Fees: $11,912.50 

Total Hours: 21.0 

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

Fiscal Plan models and analyzed supporting materials provided by the Commonwealth and the 

Oversight Board. FTI reviewed the key assumptions, such as inflation and population growth 

trends, to understand modeling methodology used to forecast operating 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 by performing detailed variance analysis of 

the expense items, and analyzed the reasonableness of the expense forecast by evaluating 

government expense per capita trends. 

 6. Analysis of the Fiscal Plan – Revenue Measures 

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 Fees: $11,523.00 

Total Hours: 17.8 

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

Plan and the related impact in the various Fiscal Plan models. FTI analyzed key changes in 

measures from previous versions of the Fiscal Plan, focusing in particular on the tax reform 

initiatives and implementation plans, based on comments from the Oversight Board in its violation 

letters. FTI also evaluated the reasonableness of the projected revenue measures impact, which 

improved significantly over the course of the Interim Period. 

7. Analysis of the Fiscal Plan – Expense Measures 

Fees: $28,106.50 

Total Hours: 40.5

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

Plan and the related impact in the various Fiscal Plan models. FTI assessed the reductions to 

government spending contemplated in the Fiscal Plan models, 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 

between the various versions of the Fiscal Plan by performing a detailed variance analysis of 

expense measure initiatives. FTI’s healthcare subject matter experts focused on the proposed 

healthcare reforms and analyzed historical healthcare trends, such as Medicaid reimbursement 

rates in Puerto Rico, to assess the feasibility of the proposed reforms and the reasonableness of the 

projected savings contemplated in the certified Fiscal Plan. They also developed diligence and data 

requests related to the proposed healthcare reforms and projected savings. 

10. Case Management 

Fees: $14,238.50 

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Total Hours: 19.3 

43. Time spent in this category includes preparation of monthly fee budgets and staffing 

plan pursuant to the Fee Examiner’s request, updating the work plan, coordinating between various 

work streams, monitoring the government’s erroneous withholding of professional fees, 

communicating with other professionals to address the tax withholding issues, and preparing 

schedules to identify the correct outstanding compensation amounts. 

 12. Analysis of Annual Budgets 

Fees: $8,565.50 

Total Hours: 20.0 

44. Time spent in this category includes translation of the various versions of the annual 

budgets for the fiscal years 2018 and 2019 from Spanish into English, analysis of the budgets by 

function and by agency, and reconciliation between the budgets and the corresponding Fiscal Plan. 

14. Analysis of Claims/Liabilities Subject to Compromise 

Fees: $105,296.50 ($752.50 of which was incurred on-island) 

Total Hours: 143.3 (0.7 of which was incurred on-island) 

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

compromise in these Title III cases, including certain bonded debt. FTI reviewed public financial 

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

structure, researched sources and uses of the issuances, and developed various analyses for 

counsel’s review. FTI also performed analysis on historical maximum debt service coverage as 

well as accounting issues with respect to certain debt issuances. 

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17. Analysis of Pension and Retiree Related Liabilities 

Fees: $118,677.50 ($537.50 of which was incurred on-island) 

Total Hours: 209.3 (0.5 of which was incurred on-island) 

46. Time spent in this category includes performing detailed analyses of the proposed 

pension cuts contemplated in the Fiscal Plan and assessing their effects in the wider context of 

Puerto Rico’s economic reality. FTI analyzed the Fiscal Plan’s modeling of the PayGo obligations 

and benefit cuts and the impact on the Fiscal Plans. FTI evaluated the different components and 

build-up of pension expenses, performed variance analysis of pension expense and measures in 

each of the five Fiscal Plan models, and analyzed the impacts of the pension cuts on the economy 

and on an average pensioner. FTI worked closely with the Retiree Committee’s actuarial 

consultants, Segal, to incorporate their actuarial analyses into broader pension reform analysis and 

worked with Jenner to analyze precedents in other cases. 

 18. General Meetings with Retiree Committee & Committee Professionals 

Fees: $74,465.50 ($4,300.00 of which was incurred on-island) 

Total Hours: 92.9 (4.0 of which was incurred on-island) 

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

Retiree Committee regarding latest case updates, including updates on the various versions of the 

Fiscal Plan, mediation, ongoing litigation, proposed pension measures, 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 and work streams, share information, 

discuss latest case developments and strategy, and prepare for upcoming meetings with the Retiree 

Committee. 

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27. Strategic Communications 

Fees: $53,769.50 

Total Hours: 122.7 

48. Time entries in this category relate to monitoring mainland media coverage of the 

Puerto Rico case and specifically on pensioners, developing and coordinating the media 

communications strategy with the local communications advisors, Marchand, to ensure consistent 

messaging between on-island and mainland, and fact checking press releases and opinion pieces 

for quality control and factual reporting. 

28. Analysis of the Fiscal Plan – Economic Review 

Fees: $475,975.50 ($6,587.50 of which was incurred on-island) 

Total Hours: 963.4 (6.5 of which was incurred on-island) 

49. Time spent in this category reflects analysis of the macroeconomic assumptions in the 

Fiscal Plan, the current economic situation of the island, and the implications of the proposed 

measures in the macroeconomic context. FTI analyzed each of the key macroeconomic 

assumptions and proposed measures in detail, including review of the modeling and case studies, 

and researched additional literature for comprehensive review. FTI also researched and analyzed 

a number of statistical data relevant to the island’s economy and studied the island’s situation 

relative to other U.S. states. FTI researched various approaches to evaluate debt sustainability 

analysis and applicability to Puerto Rico. 

30. PREPA Matters 

Fees: $100,405.50 

Total Hours: 126.8 

50. Time spent in this category reflects detailed analysis of the various versions of the 

PREPA Fiscal Plan, preparation to attend PREPA mediation meetings, monitoring of the PREPA 

privatization process, evaluation of the feasibility and reasonableness of the energy reform goals, 

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assessment of the PREPA pension obligations, and participating in public hearings related to 

Puerto Rico’s energy reforms. 

Actual and Necessary Expenses Incurred by FTI During the Interim Period 

51. 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 

$18,368.45, 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 F and Exhibit G, respectively. 

FTI’s Requested Compensation and Reimbursement Should be Allowed 

52. 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 

53. 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 

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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. 

54. 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 

55. 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 $1,877,094.50; (b) reimbursement of actual, reasonable and necessary expenses 

incurred in the Interim Period in the amount of $18,368.45; and (c) granting such other relief as 

is appropriate under the circumstances. 

Dated: July 16, 2018 Respectfully submitted, 

/s/ Sean A. Gumbs 

Sean A. Gumbs 

3 Times Square 

New York, NY 10036 

sean.gumbs@fticonsulting.com 

212-499-3633 (telephone) 

Financial Advisor to The Official Committee 

of Retired Employees of Puerto Rico

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EXHIBIT A 

Certification of Sean A. Gumbs

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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.10

PROMESA 

Title III 

No. 17 BK 3283-LTS 

(Jointly Administered) 

VERIFIED CERTIFICATION OF SEAN A. GUMBS IN SUPPORT OF 

THE THIRD 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 FEBRUARY 1, 2018 THROUGH MAY 31, 2018 

I, Sean A. Gumbs, have the responsibility for ensuring that the Application complies with 

the UST Guidelines, and I hereby certify the following: 

1. I am a Senior Managing Director with FTI Consulting, Inc., together with its 

wholly-owned subsidiaries (“FTI”), an international consulting firm. 

 

10 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. I, along with Steven Simms, lead professionals from FTI representing the Retiree 

Committee in connection with the above-captioned Title III Cases. I am authorized to submit this 

certification in support of the Third 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 February 1, 2018 through May 31, 2018 (the “Application”). Except as otherwise noted, I 

have personal knowledge of the matters set forth herein. 

3. I have read the Application. The statements contained in the Application are true 

and correct according to the best of my knowledge, information, and belief. 

4. To the best of my knowledge, information, and belief, formed after reasonable 

inquiry, the fees and disbursements sought in the Application are permissible under PROMESA, 

the Federal Rules of Bankruptcy Procedure, the Puerto Rico Oversight, Management, and 

Economic Stability Act (“PROMESA”), 48 U.S.C. §§ 2101–2241; the Federal Rules of 

Bankruptcy Procedure (the “Bankruptcy Rules”); the Bankruptcy Rules for the United States 

Bankruptcy Court for the District of Puerto Rico (the “Local Rules”); the Court’s Order 

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

Retired Employees [Dkt. No. 1413]; the Court’s First Amended Order Setting Procedures for 

Interim Compensation and Reimbursement of Expenses of Professionals [Dkt. No. 1715]; the 

Court’s Second Amended Order Setting Procedures for Interim Compensation and Reimbursement 

of Expenses of Professionals [Dkt. No. 3269]; and 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. 

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5. The fees and disbursements sought in the Application are billed at rates FTI 

customarily employs and FTI clients generally accept in matters of this nature. 

6. None of the professionals seeking compensation varied their hourly rate based on 

their geographic location. 

7. FTI is not seeking compensation for this Interim Period for routine billing activities 

that typically are not compensable outside of bankruptcy. 

8. FTI does not make a profit on costs or expenses for which it seeks reimbursement, 

whether the service is performed by FTI in-house or through a third party. 

9. In accordance with Rule 2016(a) of the Bankruptcy Rules and 11 U.S.C. § 504, no 

agreement or understanding exists between FTI and any other person for the sharing of 

compensation to be received in connection with the Title III Cases except as authorized by 

PROMESA, the Bankruptcy Rules, and the Local Rules. 

10. All services for which compensation is sought were professional services rendered 

to the Retiree Committee and not on behalf of any other person. 

11. The Retiree Committee was provided with a copy of the Application before it was 

filed with the Court and does not object to the relief requested therein. 

I certify under penalty of perjury that the foregoing is true and correct to the best of my 

knowledge, information, and belief formed after reasonable inquiry. 

Executed on July 16, 2018 

/s/ Sean A. Gumbs 

Sean A. Gumbs

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