ny-1315666

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)

Re: ECF No. 2494

LIMITED OBJECTION OF THE PBA FUNDS TO THE MOTION TO EXTEND TIME 

TO ASSUME OR REJECT UNEXPIRED LEASES

The PBA Funds, 2 who hold Government Facilities Revenue Bonds and Government 

Facilities Revenue Refunding Bonds (collectively, the “PBA Bonds”) issued by the Puerto Rico 

Public Buildings Authority (the “PBA”), hereby submit this limited objection (the “Limited 

Objection”) to the Motion for Entry of Third Order Extending Time to Assume or Reject Unexpired 

Leases of Nonresidential Real Property Under Which the Puerto Rico Public Building Authority is 

the Lessor Pursuant to Bankruptcy Code Section 365(d)(4) [ECF No. 2494] (the “Motion”).3 In

support of this Limited Objection, the PBA Funds respectfully state as follows:

 

1 The Debtors in these title III cases, along with the last four digits of each Debtor’s federal tax identification number, 

are the (i) Commonwealth of Puerto Rico (the “Commonwealth”) (No. 17-BK-3283-LTS) (3481); (ii) Employees 

Retirement System of the Government of the Commonwealth of Puerto Rico (“ERS”) (No. 17-BK-3566-LTS) (9686); 

(iii) Puerto Rico Highways and Transportation Authority (“HTA”) (No. 17-BK-3567-LTS) (3808); (iv) Puerto Rico 

Sales Tax Financing Corporation (“COFINA”) (No. 17-BK-3284-LTS) (8474); and (v) Puerto Rico Electric Power 

Authority (“PREPA”) (No. 17-BK-4780-LTS) (3747).

2 The PBA Funds currently consist of (a) Fir Tree Partners, (b) Candlewood Investment Group, and (c) Inglesea 

Capital LLC, each of which holds PBA Bonds (defined herein) or acts as investment manager or advisor (or is an

affiliate of entities which act as investment managers or advisors) to funds and/or accounts that hold PBA Bonds. See 

Supplemental Verified Statement of the PBA Funds Pursuant to Federal Rule of Bankruptcy Procedure 2019 [ECF 

No. 2522].

3 Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Motion.

Case:17-03283-LTS Doc#:2557 Filed:02/20/18 Entered:02/20/18 16:20:43 Desc: Main

Document Page 1 of 4
2

ny-1315666

LIMITED OBJECTION

1. The Motion requests an additional 120 day extension of time for the Debtors to 

determine whether to assume or reject the PBA Leases pursuant to Bankruptcy Code section 

365(d)(4). The time period of the requested extension is reasonable, but it would be unreasonable 

to grant this relief without also requiring the Debtors to perform their obligations to pay rent to the 

PBA. The Debtors are delinquent in paying rent and have not paid all amounts due and owing 

under the PBA Leases since before the commencement of these Title III Cases. The PBA Funds in 

a related motion (the “Rent Motion”) 4are seeking to compel the payment of rent to the PBA, and 

submit that any further extension of the Debtors’ deadline under Bankruptcy Code section 

365(d)(4) to assume or reject the PBA Leases should be conditioned upon their compliance with 

the mandatory requirements of section 365(d)(3).

2. The provisions of Bankruptcy Code sections 365(d)(3) and (4) work in tandem to 

balance the rights of landlords and tenants. Subsection (d)(4) gives a debtor the right to seek 

additional time with the consent of the landlord to decide whether to assume or reject an unexpired 

lease of nonresidential real property. In exchange for this continued optionality, subsection (d)(3) 

provides that the debtor tenant must continue to comply with the terms of the lease during that 

period, including, of course, paying rent. 5 As a result, whether a lessor has received timely

payment of rent has long been recognized as a critical factor in determining whether cause exists to 

grant an extension under section 365(d)(4).6 Indeed, courts have often explicitly conditioned the 

 

4

See Motion of the PBA Funds for the Payment of Rent [ECF No. 2492].

5

See, e.g., 3 COLLIER ON BANKRUPTCY ¶ 365.04 (16th ed. 2017); Matter of Barrister of Del., Ltd., 49 B.R. 446, 447 

(Bankr. D. Del. 1985); Matter of Condo. Admin. Svcs., Inc., 55 B.R. 792, 798-99 (Bankr. M.D. Fla. 1985); H.R. Rep. 

98-882, 98th Cong., 2nd Sess., reprinted in 1984 U.S.C.C.A.N. 576, 599-600 (Jun. 29, 1984) (statement of Sen. 

Hatch).

6

See In re Victoria Station, Inc., 88 B.R. 231, 236 n. 7 (9th Cir. B.A.P. 1988); see also In re Wedtech Corp., 72 B.R. 

464, 471-73 (Bankr. S.D.N.Y. 1987).

Case:17-03283-LTS Doc#:2557 Filed:02/20/18 Entered:02/20/18 16:20:43 Desc: Main

Document Page 2 of 4
3

ny-1315666

extension of the period to assume or reject an unexpired lease upon a debtor’s continued 

compliance with section 365(d)(3).7 It is appropriate for the Court to do so here.

3. Accordingly, the PBA Funds respectfully request that the Court condition any

further extension of the deadline to assume or reject the PBA Leases upon the Debtors’ compliance 

with Bankruptcy Code section 365(d)(3) in the manner described in the Rent Motion.

RESERVATION OF RIGHTS

4. The PBA Funds hereby reserve any and all rights with respect to the relief sought 

by the Motion and the issues raised by this Limited Objection, including, but not limited to, the 

right to pursue any and all remedies with respect to currently outstanding or future rents or other 

amounts due to the PBA or the holders of bonds issued by the PBA.

[Signature page follows]

 

7

 See, e.g., In re Babylon Ltd. P’ship, 76 B.R. 270, 275 (Bankr. S.D.N.Y. 1987); Wedtech, 72 B.R. at 476; In re 

Tandem Grp., 60 B.R. 125, 127 (Bankr. C.D. Cal. 1986).

Case:17-03283-LTS Doc#:2557 Filed:02/20/18 Entered:02/20/18 16:20:43 Desc: Main

Document Page 3 of 4
4

ny-1315666

Date: February 20, 2018

By: /s/ Gerardo A. Carlo

Gerardo A. Carlo

USDC PR No. 112009

Telephone: (787) 247-6680

gacarlo@carlo-altierilaw.com 

By: /s/ Kendra Loomis

Kendra Loomis

USDC PR No. 227408

Telephone: (787) 370-0255

loomislegal@gmail.com

G. CARLO-ALTIERI LAW OFFICES, LLC

254 San Jose St., Third Floor

San Juan, Puerto Rico 00901

Telephone: (787) 247-6680

Facsimile: (787) 919-0527

-andBy: /s/ Gary S. Lee 

Gary S. Lee

MORRISON & FOERSTER LLP

Gary S. Lee (admitted pro hac vice)

James M. Peck (admitted pro hac vice)

James A. Newton

Andrew R. Kissner

250 West 55th Street

New York, New York 10019

Telephone: (212) 468-8000

Facsimile: (212) 468-7900

JPeck@mofo.com

GLee@mofo.com

Counsel for the PBA Funds

Case:17-03283-LTS Doc#:2557 Filed:02/20/18 Entered:02/20/18 16:20:43 Desc: Main

Document Page 4 of 4