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 

 

Debtor 

PROMESA 

TITLE III 

Case No. 17 BK 3283-LTS 

 In Re: 

 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO 

 

as representative of 

 

PUERTO RICO ELECTRIC POWER 

AUTOHORITY 

 

Debtor 

TITLE III 

No. 17 BK 4780-LTS 

Court Filing Relates Only to PREPA and 

Shall only be Filed Case No. 17- BK-4780 

(LTS) and Main Case 17- BK-3283 (LTS) 

MOTION FOR RELIEF OF STAY

TO THE HONORABLE COURT: 

COMES NOW Master Link Corporation (“Movant” or “ML”), through the undersigned 

counsel and very respectfully move the Court for an Order pursuant to 11 U.S.C. sec. 362 for 

relief of the automatic stay, and in support of this motion, states and prays: 

I. JURISDICTION AND VENUE 

1. The United States District Court has subject matter jurisdiction over this matter 

under Section 306(a) of the Puerto Rico Oversight, Management, and Economic Stability Act 

(“PROMESA”); Sections 362(d) and 553 of Title 11 of the United States Bankruptcy Code, 

applicable to this proceeding under section 301 of PROMESA, 48 U.S.C. § 2101 et seq.; and, 

Rules 4001 and 9014 of the Federal Rules of Bankruptcy Procedure. 

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2. Venue is proper under PROMESA section 307(a). 

II. FACTUAL BACKGROUND

3. On August 25, 2016, Movant filed a complaint for breach of contract and 

damages against the Puerto Rico Electric Power Authority (“PREPA”), captioned Master Link 

Corporation v. Autoridad de Energía Eléctrica, Case Number K AC2016-0818 (604), before the 

Puerto Rico Court of First Instance in San Juan. 

4. Movant claimed that PREPA breached its obligations under Contract Number 

2011-P00067 (0912653) (“the Contract”) executed on January 3, 2011, for the rehabilitation of 

the Municipality of Culebra ́s Power Station facilities with capacity to generate six (6) 

megawatts, when the project was at approximately 95% of its conclusion. 

5. In its Complaint, Movant is requesting the Court to enter a judgment granting the 

following remedies: 

a. That PREPA’s termination of the contract for the alleged default by 

Movant ML was null and void, because it was made in contravention of the proceedings 

provided in Article 24.3.1 of the Contract; and, the project was substantially completed. 

b. To order PREPA to allow Movant ML to complete any outstanding work 

under the scope of the Contract. 

c. To declare null and void PREPA’s request to execute Movant ML’s 

performance bond. 

d. The amount of $500,000.00 for actual or future damages to Movant ML 

by PREPA’s request to execute its performance bond. 

e. To declare null and void PREPA’s suspension of Movant from its 

Suppliers Registry. 

f. The amount of $800,000.00 for damages to ML’s commercial reputation 

and economic losses due to PREPA’s decision to suspend it from its Suppliers Registry. 

g. To declare that the project was substantially completed and, therefore, 

PREPA owes Movant ML the retained amount of $235,069.08, plus default interest since 

October 7, 2014, which continue to accrue at the annual rate of 9.45%. 

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h. Default interest in the amount of $35,810.07 for PREPA’s late payment of 

Movant ML’s certificates for payment of work performed, which continue to accrue at 

the annual rate of 9.45%. 

i. The total amount of $2,521,854.90 for extended overhead for time 

extension beyond the Contract’s original term for causes not attributable to Movant, plus 

annual interest at the rate of 9.45%; 

j. The amount of $225,514.39 for work performed by Movant that has not 

been paid, pending the execution of an amendment to the Contract, plus default interest at 

the annual rate of 9.45%. 

k. The amount of $25,180.23 for demobilization expenses, plus default 

interest at the annual rate of 9.45%. 

l. The amount of $300,000.00 for damages to Movant ML caused by 

PREPA’s intentional and fraudulent breach of contract, including attorney fees actually 

incurred as a result thereof. 

m. Costs and attorney fees for PREPA’s obstinacy. 

6. On September 30, 2016, Movant filed a Motion for Partial Summary Judgment. 

On October 13, 2016, Movant filed a Motion for Entry of Default, since PREPA has not filed 

any appearance or request for extension. PREPA finally filed a Notice of Appearance on October 

17, 2016 and its Answer to Complaint on October 21, 2016. 

7. On July 2, 2017, when PREPA commenced a proceeding under Title III of

PROMESA, written discovery was almost completed and depositions were about to commence. 

The Motion for Summary Judgment filed by Movant was unopposed, because the Court had 

extended PREPA’s deadline, which expired after the case was stayed. On September 18, 2017, 

the Court of First Instance issued Judgment staying the case, which was entered and filed on 

December 7, 2017. 

8. Movant files this Motion for Relief of Stay pursuant to Paragraph III. Q of the 

operative Case Management Order. Pursuant to Paragraph III.Q., Movant certifies that it 

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requested debtor and the Board’s attorneys to meet and confer during the required Lift Stay 

Notice period in an attempt to resolve its request for relief from the automatic stay prior to filing 

the instant motion. See, Exhibit 1. Movant’s letter was followed up with multiple calls to 

attorneys for the Board, but to no avail. Since the Lift Stay Notice Period was due on February 

20, 2018, and the debtor and the Board’s attorneys’ have failed to respond, Movant has showed 

exigent circumstances for not been able to meet and confer in order to try to reach an agreement. 

III. RELIEF REQUESTED 

9. Movant seeks a modification of the stay imposed by Section 362 of the 

Bankruptcy Code so that it may continue the Commonwealth Court litigation, the breach of 

contract and damages, issues which are governed by Puerto Rico law, provided, however, that 

it will not execute against any assets of the estate, without further order of this Court.

Furthermore, the Court may take judicial notice of the damages caused by Hurricane Maria to the 

electric grid of Puerto Rico and, even more, to the islands of Culebra and Vieques. Should the 

Court lift the stay and the litigation continues before the Commonwealth Court and Movant is 

successful in its litigation, it may conclude the project, which would constitute a matter of public 

interest. 

IV. BASIS FOR MODIFICATION OF STAY 

10. Pursuant to 11 U.S.C. § 362(d), a bankruptcy court may modify the automatic

stay “for cause” to permit the liquidation of a claim in a different court in a pending action. See, 

In re Murray Industries, Inc., 121 B.R. 635, 636 (Bankr. M.D. Fla. 1990). Although a creditor 

must make a prima facie case to justify relief from the stay, the Debtor has the ultimate burden of 

persuasion that “cause” for relief does not exist under § 362 (d). See, In re Anton, 145 B.R. 767, 

769 (Bankr. E.D.N.Y. 1992). 

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11. Even though Section 362(d)(1) permits a “party in interest” to obtain relief from 

the Bankruptcy Code's automatic stay provision “for cause”, 11 U.S.C. § 362(d)(1), the statute 

does not define what constitutes “cause”, so the Courts have identified a number of factors to be 

considered in making that determination, such as: (1) the harm to the party seeking relief from 

the stay if the stay is not lifted (i.e., Peerles Insurance Company v. Peerless Insurance Company, 

208 B.R. 313 (D.R.I. 1997); (2) the harm to the debtor if the stay is lifted (i.e., In Re Annie’s, 

Inc., 201 B.R. 29 (Bankr. R.I. 1996); (3) the interests of creditors; and, (4) the effect on the fair 

and efficient administration of justice. See, In Re Unanue-Casal, 159 B.R. 90, 95-96 

(D.P.R.1993), aff'd, 23 F.3d 395 (1st Cir.1994) (listing twelve factors). 

12. In Sonnax Indus., Inc. v. TriComponent Prods. Corp. (In re Sonnax Indus., Inc.), 

907 F.2d 1280 (2d Cir. 1990), Court of Appeals for the Second Circuit enumerated the factors 

that should be analyzed for purposes of evaluating relief from the automatic stay:

a. Whether relief would result in a partial or complete resolution of the 

issues; 

b. Lack of any connection with or interference with the bankruptcy case; 

c. Whether the other proceeding involves the debtor as a fiduciary; 

d. Whether a specialized tribunal with the necessary expertise has been 

established to hear the cause of action; 

e. Whether the debtor’s insurer has assumed full responsibility for defending 

it; 

f. Whether the action primarily involves third parties; 

g. Whether litigation in another forum would prejudice the interests of other 

creditors; 

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h. Whether the judgment claim arising from the other action is subject to 

equitable subordination; 

i. Whether movant’s success in the other proceeding would result in a 

judicial lien avoidable by the debtor; 

j. The interests of judicial economy and the expeditious and economical 

resolution of litigation; 

k. Whether the parties are ready for trial in the other proceeding; and, 

l. Impact of the stay on the parties and the balance of harms. 

13. Notwithstanding, bankruptcy courts consistently modify the stay to allow pending 

litigation to continue when, as in Movant’s case, the requested relief from the stay will promote 

judicial economy and create saving for the litigants without undue prejudice to the estate. See, 

e.g. In re Tricare Rehabilitation Systems, Inc., 181 BR 569 (Bankr. N.D. Ala. 1994); and, In re 

Robbins, 964 F.2d 342 (4th Cir. 1992). To that effect, in In Re Annie’s, Inc., supra, the court 

stated “[w]here neither prejudice to the bankruptcy estate nor interference with the bankruptcy 

proceeding is demonstrated, the desire of a stayed party to proceed in another forum is sufficient 

cause to warrant lifting the automatic stay.” See also, In C & A, S. E., v. Puerto Rico Solid 

Waste Management Authority, 360 B.R. 12 (Bankr.P.R. 2006). 

14. Movant contends that this case warrants the relief from stay, because: (a) the 

causes of action and the filing of its complaint are prepetition; (b) at the time of the stay, the 

depositions were the only pending discovery; and, afterwards, PREPA had a deadline to file its 

opposition to Movant’s motion for summary judgment; (c) the interests of judicial economy, and 

of the expeditious resolution of litigation, are best served by permitting the lawsuit to proceed; 

(d) the lifting of the automatic stay would result in a complete resolution of all the issues and 

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causes of action of the complaint, which are exclusively controlled by Puerto Rico’s contract 

law, and the state courts have the expertise in this area; (e) the state court’s resolution of the case 

will not interfere with the management of the PROMESA Title III case or prejudice the interest 

of other creditors, because the requested modification of the automatic stay would be limited to 

the extent necessary to enable the parties to obtain a judgment; (f) it could also resolve the 

question of quantification of PREPA’s financial liability to Movant; (g) the Title III stay would 

continue to apply in all other respects to the prepetition action including, but not limited to, the 

execution and enforcement of any judgment for damages and provisional remedies; and, (h) 

finally, as discussed, damages caused by Hurricane Maria to the electric grid of Puerto 

Rico were even more catastrophic in the islands of Culebra and Vieques. Hence, restoring 

the electric power constitutes a matter of public interest. Upon information and belief, the 

Federal Emergency Management Agency (FEMA) is trying to find a solution to supply 

power to the islands of Vieques and Culebra, including the construction of a new back up 

power plant. Considering PREPA and the central government’s dire financial situation, it 

would be more beneficial to lift the stay of the proceedings and the continuance of the 

litigation, because if Movant is successful in its litigation, it may be able to conclude the 

project and supply electric power to Culebra and, the power in excess, would partially 

supply Vieques.

15. On the other hand, if the stay is not lifted or modified, Movant would suffer 

irreparable harm, because PREPA’s illegal request to execute its performance bond would 

result in the retention of a company to conclude the outstanding work under the Contract by the 

bond company and a suit against Movant for all the amounts spent to that effect. Moreover, if 

PREPA’s illegal decision to suspend Movant from its Suppliers Registry is not vacated by the 

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state court, Movant will continue to suffer damages to its commercial reputation and economic 

losses. Undoubtedly, the harm that would result to Movant from the continuation of the stay 

would outweigh any harm that might be suffered by PREPA if the stay is not lifted. 

16. In conclusion, the Court should modify the automatic stay and allow the

continuation of the pending litigation, as there is “cause” pursuant to Section 362(d)(1) of the 

Bankruptcy Code: the Pending Litigation is a purely a matter of Commonwealth law; as of the 

Bankruptcy Petition date the aforesaid litigation had already commenced and can be timely 

adjudicated. 

WHEREFORE: Movant ML respectfully requests from the Honorable Court a 

modification of the stay imposed by Section 362 of the Bankruptcy Code so that it may continue 

the Commonwealth Court litigation of all issues which are governed by Puerto Rico law, 

provided, however, that Movant will not execute against any assets of the estate, without further 

order of this Court. 

RESPECTFULLY SUBMITTED. 

I HEREBY CERTIFY that on this date, I have electronically filed the foregoing with 

the Clerk of the Court using the CM/ECF system, which will send notification of such filing to 

counsel of record. 

 In San Juan, Puerto Rico, this April 5th, 2018. 

S/Henry Vázquez Irizarry 

USDC No. 205011 

Bufete Vázquez Irizarry, CSP 

Urb. Villa Fontana Park 

Calle Parque Luis M. Rivera 5 HH6 

Carolina, PR 00983 

Tel. (787) 724-7514 / 787-645-2241 

Fax (888) 518-1318 

hvilaw@gmail.com 

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