230807 ORD RE CRUCES LIFT STAY VERSION AUGUST 7, 2023 1

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

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In re: PROMESA

Title III

THE FINANCIAL OVERSIGHT AND

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of No. 17 BK 3283-LTS

THE COMMONWEALTH OF PUERTO RICO (Jointly Administered)

et al.,

Debtors.1

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MEMORANDUM ORDER CONCERNING MOTION FOR RELIEF FROM AUTOMATIC STAY

Before the Court is the motion titled Motion for Relief from Automatic Stay 

(Docket Entry No. 21912 in Case No. 17-3283)2 (the “Motion”) filed on behalf of Cruz Alberto 

Rivera Quiñones (“Rivera”), Luis F. Cruz Figueroa (“Cruz”), Cruz Rivera Aviles, Carmen 

Quiñones Figueroa, Hainze Rivera Quiñones, Lorrainne Quiñones Jorge, Nicmari Rodriguez

Colon, Jorge David Rivera Vega, CJRV, Derek Rivera Rodriguez, Maria De Los Angeles 

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 (the “Commonwealth”) 

(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); (v) Puerto Rico Electric 

Power Authority (“PREPA”) (Bankruptcy Case No. 17-BK-4780-LTS) (Last Four Digits 

of Federal Tax ID: 3747); and (vi) Puerto Rico Public Buildings Authority (“PBA”) 

(Bankruptcy Case No. 19-BK-5523-LTS) (Last Four Digits of Federal Tax ID: 3801) 

(Title III case numbers are listed as Bankruptcy Case numbers due to software 

limitations).

2 Unless otherwise noted, all references herein to Docket Entry Nos. are references to Case 

No. 17-3283. 

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Figueroa Quero, Alexandra M. Davila Sierra, and CCD (collectively the “Movants”). Movants 

are plaintiffs in the lawsuit captioned Rivera Quiñones et al. v. Commonwealth of Puerto Rico et 

al., No. 15-cv-02382 (the “Action”) which was filed in the United States District Court for the 

District of Puerto Rico. The Action seeks monetary relief against the Commonwealth of Puerto 

Rico (the “Commonwealth”), the Puerto Rico Police Department (the “PRPD”), and certain 

PRPD officials, among others, arising out of Rivera and Cruz’s employment with the PRPD and 

alleged work as undercover agents for the Federal Bureau of Investigation (FBI) prior to the 

commencement of the Commonwealth’s Title III case (the “Title III Case”). The Court has 

carefully considered the Motion and the Objection of the Commonwealth of Puerto Rico to 

Motion for Relief from Automatic Stay (Docket Entry No. 22499) (the “Objection”). For the 

following reasons, the Court holds that the automatic stay imposed by section 362 of the 

Bankruptcy Code in connection with the Title III Case has expired, and that Movants’ claims, to 

the extent they assert prepetition claims against the Commonwealth and the PRPD for which no 

proof of claim was filed, were discharged by confirmation of the Modified Eight Amended Title 

III Joint Plan of Adjustment of the Commonwealth of Puerto Rico, et al. (Docket Entry No. 

19784) (the “Plan”), and Movants are now subject to a permanent injunction barring further 

prosecution of the Action with respect to any such claims.

BACKGROUND

Except where otherwise indicated, the following recitation of facts is drawn from 

the Motion, Reply, and the Second Amended Complaint filed in the Action. See Second 

Amended Complaint, Rivera Quiñones et al. v. Commonwealth of Puerto Rico et al., No. 15-cv02382-PAD (D.P.R. October 24, 2016), ECF No.186 (the “Second Amended Complaint”). 

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A. Background of the Action

In 2008, Rivera and Cruz were both employees of the Commonwealth working 

for the PRPD. See Second Am. Compl. ¶¶ 89-94. Between 2008 and 2009, Rivera and Cruz 

were allegedly contracted by the FBI to serve as undercover agents to investigate corruption 

within the PRPD. (Mot. ¶ 6.) Rivera and Cruz allege that their work as undercover agents led to

the arrest of eighty-nine PRPD employees, many of whom were convicted of federal crimes.

(Mot. ¶¶ 6-7.) As a result of the investigation and subsequent arrests, Rivera, Cruz, and their 

family members allegedly received death threats and experienced workplace retaliation at the 

PRPD. (Mot. ¶¶ 9-14.) Movants assert that the threats and retaliation required all of them to 

change homes or leave the Commonwealth for their safety. (Mot. at 4-5 ¶¶ 18-30.)

On September 30, 2015, Movants—comprising Rivera, Cruz, and many of their 

family members3

—commenced the Action in the United States District Court for the District of 

Puerto Rico. In their Second Amended Complaint, filed on October 24, 2016, Movants asserted 

claims against multiple defendants including the Commonwealth, the PRPD, PRPD officials, and 

FBI officials. See generally Second Am. Compl. Movants seek declaratory, injunctive, and 

monetary relief based on claims arising under federal law4 and Puerto Rican law for alleged 

harm suffered because of Rivera and Cruz’s work as undercover FBI agents. See Second Am. 

Compl. ¶¶ 246-58. (Mot. ¶¶ 1-5.) On December 7, 2016, the Commonwealth, the PRPD, and 

other defendants filed a motion to dismiss the Action. See Motion to Dismiss for Failure to State 

a Claim and Want of Subject Matter Jurisdiction, Rivera Quiñones et al. v. Commonwealth of 

3 “CJRV” and “CCD” are the minor children of Rivera and Cruz, respectively. See Second 

Am. Compl. ¶¶ 57, 61.

4 The federal causes of action asserted in the Second Amendment Complaint include

claims brought under 42 U.S.C. § 1983 and the Racketeer Influenced and Corrupt 

Organizations Act (RICO). (Mot. ¶¶ 1-3.)

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Puerto Rico et al., No. 15-cv-02382-PAD (D.P.R. December 7, 2016), ECF No. 204 (the 

“Motion to Dismiss”). (Obj. ¶ 9.) 

On September 4, 2017, prior to any ruling on the Motion to Dismiss, the 

Commonwealth, the PRPD, and other defendants filed an informative motion regarding the 

automatic stay in the Commonwealth’s Title III case. See Motion Regarding Notice of 

Automatic Stay and Procedures for Filing Motions for Relief from the Automatic Stay in the 

Commonwealth of Puerto Rico’s Title III Case, Rivera Quiñones et al. v. Commonwealth of 

Puerto Rico et al., No. 15-cv-02382-PAD (D.P.R. September 4, 2017), ECF No. 274 (the “Notice 

of Automatic Stay”). (Obj. ¶ 10.) The court stayed the Action on September 30, 2017. See

Order, Rivera Quiñones et al. v. Commonwealth of Puerto Rico et al., No. 15-cv-02382-PAD 

(D.P.R. September 30, 2017) ECF No. 275 (the “Stay Order”). (Obj. ¶ 10).

B. The Commonwealth’s Title III Case and Plan of Adjustment

On May 3, 2017 (the “Petition Date”), the Financial Oversight and Management 

Board for Puerto Rico (the “Oversight Board”) commenced the Title III Case in this Court on 

behalf of the Commonwealth pursuant to the Puerto Rico Oversight, Management, and 

Economic Stability Act (“PROMESA”).5

On February 15, 2018, the Court issued its Order (A) Establishing Deadlines and 

Procedures for Filing Proofs of Claim and (B) Approving Form and Manner of Notice Thereof 

(Docket Entry No. 2521) (the “Initial Bar Date Order”), setting May 29, 2018, as the deadline for 

filing proofs of claim concerning claims (as defined in section 101(5) of the Bankruptcy Code, 

11 U.S.C. § 101(5)) against the Commonwealth that arose prior to the Petition Date. On May 25, 

5 PROMESA is codified at 48 U.S.C. §§ 2101 et seq. References herein to “PROMESA” 

section numbers are to the uncodified version of the legislation. 

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2018, the Court extended that deadline to June 29, 2018 (the “Bar Date”). (See Order (A) 

Extending Deadlines for Filing Proofs of Claim and (B) Approving Form and Manner of Notice 

Thereof, Docket Entry No. 3160 (the “Bar Date Extension Order”).)

On January 18, 2022, the Court confirmed the Plan. (See Order and Judgment 

Confirming Modified Eighth Amended Title III Joint Plan of Adjustment of the Commonwealth of 

Puerto Rico, the Employees Retirement System of the Government of the Commonwealth of 

Puerto Rico, and the Puerto Rico Public Buildings Authority, Docket Entry No. 19813 (the 

“Confirmation Order”).) The Plan became effective on March 15, 2022 (the “Effective Date”). 

(See Notice of (A) Entry of Order Confirming Modified Eighth Amended Title III Plan of 

Adjustment of the Commonwealth of Puerto Rico, et al. Pursuant to Title III of PROMESA and 

(B) Occurrence of the Effective Date, Docket Entry No. 20349.)

DISCUSSION

Through the Motion, Movants seek relief from the automatic stay imposed by 

section 362 of the Bankruptcy Code to continue litigating the Action. (Mot. at 6 ¶ 23.) Movants 

argue that they are entitled to relief because the stay under section 362 “cannot be extended to 

non-debtor defendants.” (Mot. at 6 ¶ 25.) Furthermore, Movants argue, there is “cause” for the 

Court to modify the stay under section 362(d) of the Bankruptcy Code. (Mot. at 7-8 ¶¶ 29-30 

(analyzing some of the factors enumerated in Sonnax Indus., Inc. v. TriComponent Prods. Corp. 

(In re Sonnax Indus., Inc.), 907 F.2d 1280 (2d Cir. 1990)).)

As explained below, on the Effective Date of the Plan, the Commonwealth was 

granted a discharge from a broad range of claims, and the automatic stay under section 362 of the 

Bankruptcy Code was terminated. See 11 U.S.C. § 362(c)(2)(C). Although the automatic stay 

no longer precludes the assertion of Movants’ claims against the Commonwealth and the PRPD, 

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Movants’ claims against those entities cannot go forward because they have been discharged 

under the Plan of Adjustment and are permanently enjoined by the Plan. 

A. Movants’ Claims Against the PRPD Are Claims Against the Commonwealth

Movants argue that the automatic stay does not apply to “non-debtor defendants,” 

but do not specify which defendants they believe are “non-debtor defendants.” (Mot. at 6 ¶¶ 25-

26.) To the extent Movants seek relief to litigate their claims against the PRPD, Movants’ claims 

against the PRPD are claims against the Commonwealth and thus are claims against the Debtor.

See Reyes v. Supervisor of DEA, 834 F.2d 1093, 1097-98 (1st Cir. 1987) (holding that the

Eleventh Amendment precluded claims against the PRPD and PRPD officials in their official 

capacity “since [such claims] must, if successful, be satisfied from the coffers of the 

Commonwealth of Puerto Rico.”); (see also Informative Motion Regarding Entities Constituting 

the Central Government of the Commonwealth Docket Entry No. 2828, ¶¶ 7-8, Ex. B at 3 (listing 

the “Puerto Rico Police Bureau”6 or “Negociado de la Policia de Puerto Rico” as a governmental 

entity that comprises the central government of the Commonwealth and should be considered 

inseparable from the Commonwealth).)

B. The Automatic Stay Under Section 362 Has Been Superseded by a Permanent 

Injunction

Upon the commencement of a case under Title III of PROMESA, the automatic 

stay—which is codified in section 362 of the Bankruptcy Code—prohibits the “commencement 

or continuation, including the issuance or employment of process, of a judicial, administrative, or 

other action or proceeding against the debtor that was or could have been commenced before the 

6 The “Puerto Rico Police Department” or “PRPD” is the more common title for the Puerto 

Rico Police Bureau. See Hernández-Zorrilla v. Rosselló-Nevares, No. 19-1397 (SCC), 

2021 WL 1931956 at *1 n.1 (D.P.R. May 12, 2021)

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commencement of the case . . . , or to recover a claim against the debtor that arose before the 

commencement of the case ... [.]” 11 U.S.C.A. § 362(a)(1) (Westlaw through P.L. 118-10). 

Section 362(d) permits parties in interest to seek relief from the automatic stay, including for 

“cause.” See 11 U.S.C. § 362(d). Additionally, under section 362(c)(2)(C), the automatic stay 

expires at the time a discharge is granted. 11 U.S.C. § 362(c)(2)(C).7

Paragraph 56 of the Confirmation Order and section 92.2 of the Plan set forth the 

scope of the discharge that took effect upon the Effective Date: 

(a) Except as expressly provided in the Plan or the Confirmation 

Order, all distributions and rights afforded under the Plan shall be, 

and shall be deemed to be, in exchange for, and in complete 

satisfaction, settlement, discharge and release of, all Claims or 

Causes of Action against the Debtors and Reorganized Debtors that 

arose, in whole or in part, prior to the Effective Date, relating to the 

Title III Cases, the Debtors or Reorganized Debtors or any of their 

respective Assets, property, or interests of any nature whatsoever . . 

. . Upon the Effective Date, the Debtors and Reorganized Debtors 

shall be deemed discharged and released from any and all Claims, 

Causes of Action and any other debts that arose, in whole or in part, 

prior to the Effective Date (including prior to the Petition Date), and 

Claims of the kind specified in sections 502(g), 502(h) or 502(i) of 

the Bankruptcy Code and PROMESA Section 407, whether or not 

(a) a proof of claim based upon such Claim is filed or deemed filed 

under section 501 of the Bankruptcy Code, (b) such Claim is 

allowed under section 502 of the Bankruptcy Code and PROMESA 

Section 407 (or is otherwise resolved), or (c) the holder of a Claim 

based upon such debt voted to accept the Plan. 

(b) Except as expressly provided in the Plan or the Confirmation 

Order, all Entities shall be precluded from asserting any and all 

Claims against the Debtors and Reorganized Debtors, and each of 

their respective Assets, property and rights, remedies, Claims or 

7

 The plain language of 11 U.S.C. § 362(c)(2)(C) refers only to cases “under chapter 7 of 

this title concerning an individual or a case under chapter 9, 11, 12, or 13” of the 

Bankruptcy Code. 11 U.S.C.A. § 362(c)(2)(C) (Westlaw through P.L. 118-10). Section 

301(d) of PROMESA, however, provides that “a reference to ‘this title’, ‘this chapter’, or 

words of similar import in a section of title 11, United States Code made applicable in a 

case under this title shall be deemed to be a reference to this title.” 48 U.S.C.A. § 2161(d) 

(Westlaw through P.L. 118-10) (emphasis added). 

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Causes of Action or liabilities of any nature whatsoever, relating to 

the Title III Cases, the Debtors or Reorganized Debtors or any of 

their respective Assets and property, including any interest accrued 

on such Claims from and after the Petition Date, and regardless of 

whether any property will have been distributed or retained pursuant 

to the Plan on account of such Claims or other obligations, suits, 

judgments, damages, debts, rights, remedies, causes of action or 

liabilities. In accordance with the foregoing, except as expressly 

provided in the Plan or the Confirmation Order, the Confirmation 

Order shall constitute a judicial determination, as of the Effective 

Date, of the discharge and release of all such Claims, Causes of 

Action or debt of or against the Debtors and the Reorganized 

Debtors pursuant to sections 524 and 944 of the Bankruptcy Code, 

applicable to the Title III Case pursuant to Section 301 of 

PROMESA, and such discharge shall void and extinguish any 

judgment obtained against the Debtors or Reorganized Debtors and 

their respective Assets, and property at any time, to the extent such 

judgment is related to a discharged Claim, debt or liability. As of the 

Effective Date, and in consideration for the value provided under the 

Plan, each holder of a Claim in any Class under this Plan shall be 

and hereby is deemed to release and forever waive and discharge as 

against the Debtors and Reorganized Debtors, and their respective 

Assets and property, all such Claims.

(Confirmation Order ¶ 56(b); see also Plan § 92.2(b).) Pursuant to those provisions, upon the 

occurrence of the Effective Date (as that term is defined in the Plan) on March 15, 2022, the 

Commonwealth was granted a discharge from a broad range of claims and, under section 

362(c)(2)(C) of the Bankruptcy Code, the automatic stay terminated. See 11 U.S.C. 

§ 362(c)(2)(C).

Furthermore, the automatic stay has been superseded by a permanent injunction 

(the “Plan Injunction”) that has an effect similar to that of the automatic stay and does not expire, 

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even upon dismissal of the Commonwealth’s Title III case. See 11 U.S.C. §§ 524(a)(2), 944(b). 

(See also Plan § 92.3; Confirmation Order ¶ 59.)

C. Movants’ Claims Against the Commonwealth and the PRPD Have Been 

Discharged and Permanently Enjoined by the Plan Injunction.

Although the automatic stay no longer precludes the assertion of Movant’s claims 

against the Commonwealth and the PRPD, any such claims have been discharged by the Plan

and cannot be pursued because they are subject to the Plan Injunction.

Movants were required to file a proof of claim prior to the Bar Date to have any 

prepetition claims addressed within the Commonwealth’s Title III proceedings. (See Initial Bar 

Date Order ¶ 15 (“[A]ny creditor who fails to file a proof of claim on or before the applicable 

Bar Date ... with respect to such claim: (a) shall not be treated as a creditor of the Debtors for 

purposes of voting upon or receiving distributions under any plan of adjustment in these Title III 

Cases, and (b) shall be forever barred, estopped, and enjoined from asserting such claim against 

the Debtors or thereafter filing a proof of claim thereto in these Title III Cases (unless otherwise 

ordered by the Court), and the Debtors and their property shall be forever discharged from any 

and all indebtedness or liability with respect to such claim.”).)

Movants did not file a proof of claim with respect to their claims against the 

Commonwealth in the Title III case. The result of Plan confirmation and the occurrence of the 

Effective Date is that all claims against the Commonwealth arising prior to the Effective Date 

and not expressly provided for under the Plan have been discharged. See 11 U.S.C. § 944(b). 

(See also Plan § 92.2(b); Confirmation Order ¶ 56(b).) Movants’ claims, which were not filed, 

were not expressly provided for under the Plan. Thus, upon occurrence of the Effective Date,

Movants’ prepetition claims against the Commonwealth—which include their claims against the 

PRPD—were discharged and subject to the Plan Injunction. Movants therefore cannot proceed 

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with the Action because they are permanently enjoined by the terms of the Plan from pursuing 

those claims. See In re Residential Cap., LLC, 508 B.R. 838, 848 (Bankr. S.D.N.Y. 2014) 

(denying a movant’s post confirmation motion to lift the stay because movant had failed to file a 

proof of claim and their claims were discharged and permanently enjoined by the confirmed 

plan).

CONCLUSION

In conclusion, Movants’ claims against the Commonwealth and the PRPD were 

subject to the automatic stay and, upon the Effective Date of the Plan, final disposition in the 

Commonwealth’s PROMESA Title III Case. Now that the Plan for the Commonwealth, which 

bars recovery on claims that were not timely filed, has been confirmed and has become effective, 

Movants’ Action cannot be prosecuted as to the claims against the Commonwealth and the 

PRPD. Those claims have been discharged and are permanently subject to the Plan Injunction. 

The Motion for stay relief is therefore denied insofar as it seeks leave to resume litigation of 

Movants’ claims against the Commonwealth and the PRPD. 8

This Memorandum Order resolves Docket Entry No. 21912 in Case No. 17-3283.

SO ORDERED.

Dated: August 7, 2023

 /s/ Laura Taylor Swain 

LAURA TAYLOR SWAIN 

United States District Judge

8 Movants have not requested any narrower form of relief (such as, for example, relief to 

litigate specific claims that might not be barred by the Plan Injunction) and the parties 

therefore have not addressed whether any narrower subset or permutation of the claims 

pleaded in the Second Amended Complaint (such as, for example, claims against the 

PRPD officials in their personal capacities) are subject to the Plan Injunction. Thus, the 

Court denies the Motion without addressing this issue. Furthermore, the Court does not 

address the scope of the Stay Order imposed by the district court. 

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