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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

In re

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PROMESA

Title III

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THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

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No. 17 BK 3283-LTS

(Jointly Administered)

As a representative of )

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THE COMMONWEALTH OF PUERTO RICO

et al.,

Debtors.1

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SECOND INTERIM FEE APPLICATION OF ERNST & YOUNG LLP, 

AS FINANCIAL ADVISOR TO THE FINANCIAL OVERSIGHT 

AND MANAGEMENT BOARD FOR PUERTO RICO, FOR 

TITLE III SERVICES RENDERED AND REIMBURSEMENT OF EXPENSES 

FOR THE PERIOD FROM OCTOBER 1, 2017 THROUGH JANUARY 31, 2018

Name of Applicant: Ernst & Young LLP

Authorized to Provide Professional Services to: The Financial Oversight and Management 

Board for Puerto Rico

Date of Retention: Effective as of May 3, 2017 for Title III Cases

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

January 31, 2018

 

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).

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Amount of interim compensation sought as actual, reasonable, and necessary for Title III 

Services: $1,261,586.10

Amount of interim expense reimbursement sought as actual, reasonable, and necessary in 

connection with Title III Services: $12,546.21

Are your fee or expense totals different from the sum of previously-served monthly statements? 

______Yes ___x____ No. If there is any discrepancy, please explain it in the text of the 

attached fee application or in a footnote to this cover sheet.

Blended rate in this application for all professionals for Title III Services: $572.43/ hour

This is an interim application.

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

approximately 110.1 hours and the corresponding compensation requested is $26,262.60.

PRIOR INTERIM FEE APPLICATIONS & ADJUSTMENTS: 

Date Filed Fees 

Requested

Expenses 

Requested

Fee 

Adjustments

Expense 

Adjustments

Fees 

Approved

Expenses 

Approved

12/15/2017 $1,169,699.80 $4,910.69 $33,230.32 $839.80 $1,136,469.48 $4,070.89

Number of professionals with time included in this application: 

If applicable, number of professionals in this application not included in a staffing plan approved 

by the client: 0

If applicable, difference between fees budgeted and compensation sought for this period: 

Pursuant to the attached Budget Plan, EY’s actual fees for Title III Services (defined 

herein) during the interim period were approximately $40,947.10 more than budgeted fees.

Are any timekeeper’s hourly rates higher than those charged and approved upon retention: No.

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1. By this Application, Ernst & Young LLP (“EY”) respectfully requests allowance 

and payment of $1,261,586.10 as compensation and reimbursement of $12,546.21 of expenses, 

with respect to services rendered to The Financial Oversight and Management Board for Puerto 

Rico (the “Board”) that are not customarily required outside Title III cases (the “Title III 

Services”), for the interim period from October 1, 2017 through January 31, 2018 (the “Fee

Period”).2 This Application also includes fees Title III Services that were incurred before 

October 1, 2017.

2. The supporting detail for this Application is attached hereto as Exhibits A through 

G. Exhibit A contains a summary of compensation requested by professional for Title III 

Services. Exhibit B contains a summary of compensation requested by project category for Title 

III Services. Exhibit C contains a summary of expenses requested in connection with EY’s 

provision of Title III Services during the Fee Period. Exhibit D contains EY’s detailed time 

records for Title III Services during the Fee Period. Exhibit E contains EY’s detailed expense 

records in connection with EY’s provision of Title III Services during the Fee Period. Exhibit F

contains EY’s budget for Title III Services for the Fee Period. Exhibit G contains EY’s staffing 

plan for Title III Services for the Fee Period.3

Title III Services Provided During the Fee Period

3. During the Fee Period, EY performed the categories of Title III Services for the 

Board that are described in Exhibit B hereto.

 

2

 EY also rendered other services to the Board that are customarily required outside Title III cases (the “Non-Title 

III Services”). In accordance with the Court’s First Amended Order Setting Procedures For Interim Compensation 

and Reimbursement of Expenses of Professionals, entered on November 8, 2017 [Docket No. 1715], this Application 

does not include the fees and expenses that EY incurred in performing Non-Title III Services.

3

 EY understands that it is not required to provide a comparable hourly rate disclosure, pursuant to the letter from 

the Government of Puerto Rico regarding the applicability of the US Trustee Guidelines to financial advisors.

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4. The total time spent by EY providing Title III Services for the Board during the 

Fee Period was approximately 2,203.9 hours. The blended hourly rate for Title III Services 

performed for the Board during the Fee Period is approximately $572.43.

Statement in Compliance With Appendix B Guidelines C.5

5. The following answers are provided in response to the questions set forth in

Appendix B Guidelines paragraph C.5:

Question: Did you agree to any variations from, or alternatives to, your standard or

customary billing rates, fees or terms for services pertaining to this engagement that were 

provided during the application period? If so, please explain.

Response: No.

Question: If the fees sought in this fee application as compared to the fees budgeted for the 

time period covered by this fee application are higher by 10% or more, did you discuss the 

reasons for the variation with the client?

Response: Not applicable.

Question: Have any of the professionals included in this fee application varied their hourly 

rate based on the geographic location of the bankruptcy case?

Response: No.

Question: Does the fee application include time or fees related to reviewing or revising time 

records or preparing, reviewing, or revising invoices? (This is limited to work involved in 

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preparing and editing billing records that would not be compensable outside of bankruptcy and 

does not include reasonable fees for preparing a fee application.). If so, please

quantify by hours and fees.

Response: No.

Question: Does this fee application include time or fees for reviewing time records to redact any 

privileged or other confidential information? If so, please quantify by hours and fees.

Response: This particular fee application does not include any such time or fees.

Question: If the fee application includes any rate increases since retention: (i) Did your 

client review and approve those rate increases in advance? (ii) Did your client agree when 

retaining the law firm to accept all future rate increases? If not, did you inform your client that 

they need not agree to modified rates or terms in order to have you continue the representation,

consistent with ABA Formal Ethics Opinion 11-458?

Response: The engagement letters that were signed by the Board provide that EY’s rates 

are subject to increase, typically once a year on July 1. Since EY is not a law firm, it is not 

subject to ABA Formal Ethics Opinion 11-458.

Johnson Factors

6. Below is a discussion of the twelve factors set forth in Johnson v. Ga. Highway 

Express, Inc., 488 F.2d 714, 717-19 (5th Cir. 1974), made applicable to compensation 

determinations in bankruptcy in Am. Benefit Life Ins. Co. v. Baddock (In re First Colonial Corp. 

of Am.), 544 F.2d 1291, 1298-99 (5th Cir. 1977):

(1) The time and labor required. The number of hours expended during the 

Fee Period demonstrates that EY devoted a substantial amount of time on a variety of issues that 

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have arisen during the Fee Period. EY rendered the services within a reasonable amount of time 

commensurate with the complexity, importance and nature of the issues it addressed.

(2) The novelty and difficulty of the issues. Many of the issues that EY 

addressed were complex, and required the skill and experience of sophisticated accounting and 

restructuring professionals.

(3) The skill requisite to perform the services properly. To properly perform 

the Title III Services it rendered during the Fee Period, EY was required to draw upon the skill 

and substantive knowledge of its professionals.

(4) The preclusion of other employment by the professional due to acceptance 

of the case. EY committed a significant amount of time and labor to the Board during the Fee 

Period, which otherwise would have been dedicated to other matters for which, in most 

instances, EY’s invoices would have been paid in full on a timely basis.

(5) The customary fee. EY’s fees are based on the customary rates it charges 

its other clients for similar types of services.

(6) Whether the fee is fixed or contingent. EY is charging the Board on an 

hourly-fee basis for the services it rendered during the Fee Period.

(7) Time limitations imposed by the client or the circumstances. The 

circumstances of these cases have occasionally imposed time constraints on EY, because of the 

need for rapid resolution of significant issues.

(8) The amount involved and the results obtained. EY respectfully submits 

that its Title III Services have resulted in substantial benefits to the Board, which ultimately 

redounds to the benefit of the Title III debtors.

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(9) The experience, reputation and ability of the professionals. EY is a very 

well-regarded and established professional services firm, and its partners and professional 

employees are experienced in performing the Title III Services. 

(10) The “undesirability” of these cases. EY does not believe these cases are 

undesirable, based on its understanding that its requested compensation and expense 

reimbursement would be awarded.

(11) The nature and length of the professional relationship with the client. EY 

has provided professional services to the Board since early 2017.

(12) Awards in similar cases. The amount of compensation and expense 

reimbursement is reasonable in terms of the awards granted in cases of similar magnitude and 

complexity.

7. The request herein is without prejudice to EY’s right to seek additional 

compensation for Title III Services performed and expenses incurred during the Fee Period, 

which were not processed at the time of this Application.

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WHEREFORE, EY LLP hereby respectfully requests allowance and payment of 

$1,261,586.10 as compensation and reimbursement of $12,546.21 of expenses, with respect to 

Title III Services during the Fee Period. EY LLP also respectfully requests that it be granted 

such other and further relief as the Court may deem just and proper.

Dated: March 21, 2018 Respectfully submitted,

By: /s/ Gaurav Malhotra

Gaurav Malhotra

Ernst & Young LLP

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VERIFICATION

I hereby certify that:

a) I am a principal with the applicant firm, Ernst & Young LLP (“EY”).

b) I am familiar with the work performed on behalf of The Financial Oversight and 

Management Board for Puerto Rico by EY during the Fee Period.

c) I have reviewed the foregoing Application and the facts set forth therein are true 

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

Dated: March 21, 2018 Respectfully submitted,

By: /s/ Gaurav Malhotra

Gaurav Malhotra

Ernst & Young LLP

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