Hearing Date: July 25, 2018 at 9:30 a.m. (AST) 

Objection Deadline: July 10, 2018 at 4:00 p.m. (AST)

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

---------------------------------------------------------------------- X 

 : 

In re: : 

 : 

THE FINANCIAL OVERSIGHT AND : PROMESA 

MANAGEMENT BOARD FOR PUERTO RICO, : Title III 

 : 

 as representative of : Case No. 17-BK-3283 (LTS) 

 : 

THE COMMONWEALTH OF PUERTO RICO et al., : (Jointly Administered) 

 : 

Debtors.1

 : 

---------------------------------------------------------------------- X 

MOTION OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS TO CLARIFY 

OR AMEND FOURTH AMENDED NOTICE, CASE MANAGEMENT AND 

ADMINISTRATIVE PROCEDURES REGARDING DISCLOSURE REQUIREMENTS 

PURSUANT TO FEDERAL RULE OF BANKRUPTCY PROCEDURE 2019 

 

1

 The Debtors in these 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 the (i) Commonwealth of Puerto Rico (the “Commonwealth”) 

(Bankruptcy Case No. 17-BK-3283 (LTS)) (Last Four Digits of Federal Tax ID: 3481), (ii) 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), (iii) Puerto Rico Highways and Transportation 

Authority (“HTA”) (Bankruptcy Case No. 17-BK-3567 (LTS)) (Last Four Digits of Federal Tax ID: 3808), and 

(iv) Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17-BK-3284 (LTS)) 

(Last Four Digits of Federal Tax ID: 8474). 

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TABLE OF CONTENTS 

Page 

PRELIMINARY STATEMENT .................................................................................................... 2

JURISDICTION, VENUE, AND STATUTORY BASES ............................................................. 3

BACKGROUND ............................................................................................................................ 4

RELIEF REQUESTED ................................................................................................................... 7

BASIS FOR RELIEF ...................................................................................................................... 8

I. Confusion May Exist Regarding Degree of Participation Required to Trigger Case 

Management Procedures Disclosure Requirements ............................................................ 9

II. Case Management Procedures Should Be Clarified to More Precisely Define 

What Actions Constitute Taking Position in Debtor’s Title III Case ............................... 11

III. In Alternative, Blanket Disclosure Rule Should Be Imposed Requiring Disclosure 

Regarding Interests in All Title III Debtors ...................................................................... 12

IV. The Court Should Impose Disclosure Remedies for Past Failures to Provide 

Required Disclosure .......................................................................................................... 14

CONCLUSION ............................................................................................................................. 15

NO PRIOR REQUEST ................................................................................................................. 15

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TABLE OF AUTHORITIES 

 Page(s) 

Statutes 

11 U.S.C. 

§ 105...........................................................................................................................................8 

§ 105(a) ..............................................................................................................................1, 4, 8 

48 U.S.C. § 2194(m)(1) ...................................................................................................................2 

PROMESA 

§ 301(a) ..............................................................................................................................1, 4, 8 

§ 301(d) ......................................................................................................................................8 

§ 306(a) ......................................................................................................................................3 

§ 307(a) ......................................................................................................................................3 

§ 310...................................................................................................................................1, 4, 8 

Other Authorities 

Federal Rules of Bankruptcy Procedure 

2019.................................................................................................................................. passim

2019(b) ............................................................................................................................. passim

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To the Honorable United States District Judge Laura Taylor Swain: 

The Official Committee of Unsecured Creditors of all Title III Debtors (other than 

COFINA) (the “Committee”) hereby submits this motion (the “Motion”), pursuant to section 

105(a) of Title 11 of the United States Code (the “Bankruptcy Code”), made applicable to these 

Title III cases by section 301(a) of PROMESA, and Rule 2019 of the Federal Rules of 

Bankruptcy Procedure (the “Rules”), made applicable to these Title III cases by section 310 of 

PROMESA, (a) requesting entry of an order, substantially in the form attached hereto as 

Exhibit A (“Proposed Order A”), clarifying the Fourth Amended Notice, Case Management and 

Administrative Procedures (the “Case Management Procedures”)2 [Exhibit A to Docket No. 

2839, dated April 4, 2018] to ensure that every Rule 2019(b) Group3 involved in these Title III 

cases discloses all its economic interests with respect to all the Title III Debtors in whose cases 

the Rule 2019(b) Group has appeared in any capacity, including by means of the filing of 

informative motions, the execution of court-approved stipulations, or the filing of proofs of 

claim, among other pleadings; or (b) in the alternative, renewing the Committee’s request for 

entry of an order, substantially in the form attached hereto as Exhibit B (“Proposed Order B” 

and, together with Proposed Order A, the “Proposed Orders”), amending the Case Management 

Procedures to require that every Rule 2019(b) Group that has appeared in these Title III cases in 

any capacity disclose its economic interests with respect to all Title III Debtors regardless of 

 

2

 Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Case 

Management Procedures. 

3

 A “Rule 2019(b) Group” is defined in the Case Management Procedures as “[e]very group, committee and 

entity described in Federal Rule of Bankruptcy Procedure 2019(b)(1).” Case Management Procedures, at ¶ 

IV.A. Rule 2019(b)(1) describes such groups as “every group or committee that consists of or represents, and 

every entity that represents, multiple creditors or equity security holders that are (A) acting in concert to 

advance their common interests, and (B) not composed entirely of affiliates or insiders of one another.” Fed. R. 

Bankr. P. 2019(b)(1). 

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whether or not it has taken a position in a particular Title III case. In support of the Motion, the 

Committee respectfully states as follows: 

PRELIMINARY STATEMENT 

1. Congress observed in the PROMESA statute that “lack of financial transparency” 

was one of the key factors that created Puerto Rico’s fiscal emergency,4

 and just as this lack of 

transparency in the past was a key factor in Puerto Rico’s financial crisis, robust transparency 

now will be key to the success of Puerto Rico’s Title III cases. Given the importance of 

transparency in this process, disclosure pursuant to Rule 2019 is of the utmost importance in 

these Title III cases. 

2. The Committee files this motion because it is concerned that, in some instances, 

there may be confusion with respect to the obligations of certain Rule 2019(b) Groups to comply 

with Rule 2019. As further explained below, some Rule 2019(b) Groups have filed verified 

statements pursuant to Rule 2019 in which they appear to disclose economic interests held with 

respect to all Title III Debtors, which is to be commended. In contrast, other Rule 2019(b) 

Groups have filed verified statements in which these groups appear to disclose economic 

interests solely with respect to a particular Debtor. These Rule 2019(b) Groups may hold 

economic interests with respect to other Debtors that they have not disclosed, and presumably 

they are not disclosing such interests because they believe that they have not “taken a position” 

in such other Debtors’ cases so as to trigger Rule 2019 disclosure obligations under the Case 

Management Procedures. However, it appears that some of these groups have in fact “taken a 

position” in the Title III cases of such other Debtors (by, for example, filing motions to 

intervene, executing court-approved stipulations, or filing claims in such other Debtors’ cases). 

 

4

 48 U.S.C. § 2194(m)(1). 

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3. Given this situation, the Committee believes it is possible that there has not been 

full compliance with the Case Management Procedures. If such non-disclosure has occurred, 

Rule 2019(b) Groups might appear to the court and/or parties in interest as holders of one type of 

interest with respect to a particular Debtor(s), when in reality they hold other positions, with 

important potential implications for the incentives and motivations behind the positions such 

groups advocate in the Title III cases. The Committee does not believe that the court intended 

such a result, which appears contrary to at least the spirit, if not the letter, of Rule 2019. 

4. Therefore, the Committee believes that the court should clarify the degree of 

participation by a Rule 2019(b) Group in a Debtor’s Title III case that would qualify as the 

“taking a position” in that Debtor’s case, thus triggering the requirement in the Case 

Management Procedures that the Rule 2019(b) Group disclose economic interests with respect to 

such Debtor. In the alternative, the Committee requests that the court impose a blanket 

disclosure rule requiring that every Rule 2019(b) Group that has appeared in these Title III cases 

in any capacity disclose its economic interests with respect to all Title III Debtors, regardless of 

whether or not it has taken a position in a particular Title III case. This alternative form of relief 

would not only be simple, but would also recognize the reality that these various Title III cases 

are intricately linked. 

JURISDICTION, VENUE, AND STATUTORY BASES 

5. The United States District Court for the District of Puerto Rico has subject matter 

jurisdiction over this matter pursuant to section 306(a) of PROMESA. 

6. Venue is proper pursuant to section 307(a) of PROMESA. 

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7. The statutory bases for the relief requested herein are section 105(a) of the 

Bankruptcy Code, made applicable to these Title III cases by section 301(a) of PROMESA, and 

Rule 2019, made applicable to these Title III cases by section 310 of PROMESA. 

BACKGROUND 

8. On June 2, 2017, the court entered an order approving the Case Management 

Procedures, which set forth certain notice, case management, and administrative procedures for 

the Title III cases [Docket No. 249].5 

9. On July 26, 2017, the court entered its Order Regarding the Applicability of 

F.R.B.P. 2019 to the Title III Cases and A Further Proposed Amendment to the Case 

Management Order [Docket No. 754] (the “Rule 2019 Order”), in which the court proposed 

amendments to the Case Management Procedures with the purpose of ensuring full and timely 

compliance with Rule 2019 by Rule 2019(b) Groups. On August 2, 2017, the Committee filed an 

informative motion6 (the “Committee Informative Motion”) suggesting amendments to the Case 

Management Procedures that would require certain additional disclosures by Rule 2019(b) 

Groups. 

10. Subsequently, at the hearing held on August 9, 2017, the court addressed the 

Committee’s Informative Motion, stating as follows: 

 I had also proposed to amend the case management procedures to include 

specific provisions requiring compliance with Rule 2019, which had begun to 

happen organically around the same time, but I want to have that clear in the Case 

Management Order. 

 There was a response from the UCC by way of an informative motion 

seeking a very detailed refinement of requirements in that regard that go, to an 

 

5

 From time to time, the court has entered orders amending the Case Management Procedures, which are not 

relevant to the issues discussed in this Motion. 

6

 Informative Motion of Official Committee of Unsecured Creditors Regarding Applicability of Bankruptcy Rule 

2019 to Title III Cases and Further Proposed Amendment to Case Management Order [Docket No. 850, Aug. 

2, 2017]. 

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extent, in the Court’s view, beyond [Rule] 2019. The Court declines to require 

the full scope of additions to disclosures that were suggested by the UCC. 

However, the Court does believe that and agrees with the UCC that 

compliance with [Rule] 2019 requires disclosure of all economic interest[s] 

with respect to each debtor in whose Title III case the group committee 

and/or entity has taken a position, including interests in derivatives, and that 

the disclosure must also include the existence and amount of any bond 

insurance or other credit protection, including such protection by a monoline 

insurer.7

11. On August 17, 2017, the court entered its order further amending the Case 

Management Procedures [Docket No. 1065] to, among other things, incorporate the amendments 

proposed in the Rule 2019 Order and discussed at the August 9 hearing. As a result, a new 

Section IV was added to the Case Management Procedures entitled “Disclosure Requirements,” 

which includes the following instruction: 

For the avoidance of doubt and for the purposes of these Title III cases, 

compliance with Bankruptcy Rule 2019 includes disclosure of: (i) all economic 

interests with respect to each Debtor in whose Title III case the group, 

committee and/or entity has taken a position, including derivative interests, 

and (ii) the existence and amount of any bond insurance or other credit protection, 

including by a monoline insurer.8

12. The court’s amendment clarified further in a footnote to Paragraph IV.A that, 

“[f]or the avoidance of doubt, the phrase ‘takes a position before the Court’ includes, but is not 

limited to, the filing of any Pleading, including informative motion practice containing factual or 

legal representations or arguments.”9

 

7

 Hr’g Tr. 34:12 – 35:7, August 9, 2017 (emphasis added). 

8

 Case Management Procedures, ¶ IV.A (emphasis added). 

9

 Id. n. 3 (emphasis added). The term “Pleadings” is in turn defined by the Case Management Procedures as 

“[a]ll documents filed in these Title III Cases, including, but not limited to, all notices, motions, applications, 

other requests for relief, all briefs, memoranda, affidavits, declarations, and other documents filed in support of 

such papers seeking relief.” Case Management Procedures, ¶ I.B. 

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13. A number of Rule 2019(b) Groups have filed Rule 2019 verified statements in the 

Title III cases. These include the Mutual Fund Group10 and PREPA Ad Hoc Group,11 who have 

consistently filed verified statements in which they appear to disclose interests held by the 

members of the groups with respect to all Title III Debtors. 

14. On the other hand, the COFINA Senior Bondholders’ Coalition has filed verified 

statements pursuant to Rule 2019 in which it only reports interests with respect to COFINA.12 

These Rule 2019 statements may or may not be compliant with the Case Management 

Procedures depending on whether at the time they were filed (i) the members of the COFINA 

Senior Bondholders’ Coalition held interests with respect to another Debtor(s), and (ii) the 

COFINA Senior Bondholders’ Coalition had taken a position in such other Debtor’s Title III 

case. 

15. On July 13, 2017, the ad hoc group of general obligation (“GO”) bondholders (the 

“GO Group”) filed an initial Rule 2019 verified statement reporting interests with respect to the 

 

10 See Third Supplemental Verified Statement of the Mutual Fund Group Pursuant to Federal Rule of Bankruptcy 

Procedure 2019 [Docket No. 2588, Feb. 24, 2018]; Second Supplemental Verified Statement of the Mutual 

Fund Group Pursuant to Federal Rule of Bankruptcy Procedure 2019 [Docket No. 1988, Dec. 13, 2017]; First 

Supplemental Statement of the Mutual Fund Group Pursuant to Federal Rule of Bankruptcy Procedure 2019

[Docket No. 1693, Nov. 7, 2017]; Statement of the Mutual Fund Group Pursuant to Federal Rule of Bankruptcy 

Procedure 2019 [Docket No. 1056, Aug. 16, 2017]. 

11 See Third Supplemental Verified Statement of the Ad Hoc Group of PREPA Bondholders Pursuant to Federal 

Rule of Bankruptcy Procedure 2019 [Docket No. 633 in Case No. 17 BK 4780 (LTS), Feb. 6, 2018]; Second 

Supplemental Verified Statement of the Ad Hoc Group of PREPA Bondholders Pursuant to Federal Rule of 

Bankruptcy Procedure 2019 [Docket No. 1989, Dec. 13, 2017]; First Supplemental Verified Statement of the Ad 

Hoc Group of PREPA Bondholders Pursuant to Federal Rule of Bankruptcy Procedure 2019 [Docket No. 1691, 

Nov. 7, 2017]; Verified Statement of the Ad Hoc Group of PREPA Bondholders Pursuant to Federal Rule of 

Bankruptcy Procedure 2019 [Docket No. 164 in Case No. 17 BK 4780 (LTS), Aug. 2, 2017].

12 See Fifth Supplemental Verified Statement of the COFINA Sr. Bondholders’ Coalition Pursuant to Federal Rule 

of Bankruptcy Procedure 2019 [Docket No. 2974, Apr. 27, 2018]; Fourth Supplemental Verified Statement of 

the COFINA Sr. Bondholders’ Coalition Pursuant to Federal Rule of Bankruptcy Procedure 2019 [Docket No. 

2669, Mar. 5, 2018]; Third Supplemental Verified Statement of the COFINA Sr. Bondholders’ Coalition 

Pursuant to Federal Rule of Bankruptcy Procedure 2019 [Docket No. 2252, Jan. 16, 2018]; Second 

Supplemental Verified Statement of the COFINA Sr. Bondholders’ Coalition Pursuant to Federal Rule of 

Bankruptcy Procedure 2019 [Docket No. 1552 ,Oct. 26, 2017]; First Supplemental Verified Statement of the 

COFINA Sr. Bondholders’ Coalition Pursuant to Federal Rule of Bankruptcy Procedure 2019 [Docket No. 

1090, Aug. 18, 2017]; Verified Statement of the COFINA Sr. Bondholders’ Coalition Pursuant to Bankruptcy 

Rule 2019 [Docket No. 749, July 25. 2017]. 

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Commonwealth, HTA, and COFINA,13 and it subsequently filed supplemental verified 

statements in which it reported interests solely with respect to the Commonwealth.14 These Rule 

2019 statements may or may not be compliant with the Case Management Procedures depending 

on whether at the time they were filed (i) the members of the GO Group held interests with 

respect to another Debtor(s), and (ii) the GO Group had taken a position in such other Debtor’s 

Title III case. 

16. The ERS Secured Creditors group has filed verified statements reporting only 

interests held with respect to ERS.15 These Rule 2019 statements may or may not be compliant 

with the Case Management Procedures depending on whether at the time they were filed (i) the 

members of the ERS Secured Creditors group held interests with respect to another Debtor(s), 

and (ii) the ERS Secured Creditors group had taken a position in such other Debtor’s Title III 

case. 

RELIEF REQUESTED 

17. To remedy the apparent confusion with respect to what degree of participation by 

a Rule 2019(b) Group would require such Rule 2019(b) Group to file a Rule 2019 verified 

statement with respect to a particular Title III Debtor, the Committee requests either: (a) entry of 

Proposed Order A, which clarifies the Case Management Procedures to require that every Rule 

2019(b) Group disclose all its economic interests with respect to all the Title III Debtors in 

 

13 See Verified Statement of the Ad Hoc Group of General Obligation Bondholders Pursuant to Bankruptcy Rule 

2019 [Docket No. 630, July 13, 2017]. 

14 See Second Supplemental Verified Statement of the Ad Hoc Group of General Obligation Bondholders Pursuant 

to Federal Rule of Bankruptcy Procedure 2019 [Docket No. 3336, June 21, 2018]; First Supplemental Verified 

Statement of the Ad Hoc Group of General Obligation Bondholders Pursuant to Federal Rule of Bankruptcy 

Procedure 2019 [Docket No. 1625, Nov. 3, 2017]. 

15 See First Supplemental Verified Statement of the ERS Secured Creditors Pursuant to Federal Rule of 

Bankruptcy Procedure 2019 [Docket No. 226 in Case No. 17 BK 3566 (LTS), Dec. 8, 2017]; Verified Statement 

of the ERS Secured Creditors Pursuant to Bankruptcy Rule 2019 [Docket No. 194 in Case No 17 BK 3566 

(LTS), Aug. 15, 2017]. 

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whose cases the Rule 2019(b) Group has appeared in any capacity, including by means of the 

filing of informative motions, the execution of court-approved stipulations, or the filing of proofs 

of claim, among other pleadings; or (b) in the alternative, the entry of Proposed Order B, which 

would amend the Case Management Procedures to require that every Rule 2019(b) Group that 

has appeared in these Title III cases in any capacity disclose its economic interests with respect 

to all Title III Debtors regardless of whether or not it has taken a position in a particular Title III 

case. 

BASIS FOR RELIEF 

18. Section 105 of the Bankruptcy Code, which is made applicable to these Title III 

cases by section 301(a) of PROMESA, authorizes the court to “issue any order, process, or 

judgment that is necessary or appropriate to carry out the provisions of this title.”16 Rule 2019, 

which is made applicable to these Title III cases by section 310 of PROMESA, requires, among 

other things, detailed disclosures by Rule 2019(b) Groups regarding the disclosable economic 

interests17 held by their members. As discussed above, the Case Management Procedures require 

disclosure of economic interests with respect to a Debtor in whose case a Rule 2019(b) Group 

“has taken a position,”18 which is defined broadly to include, among other things “the filing of 

any Pleading.”19 

 

16 11 U.S.C. § 105(a); see also PROMESA § 301(d) (references to “this title” under the Bankruptcy Code are 

deemed to be references to Title III of PROMESA). 

17 “Disclosable economic interest” means “any claim, interest, pledge, lien, option, participation, derivative 

instrument, or any other right or derivative right granting the holder an economic interest that is affected by the 

value, acquisition, or disposition of a claim or interest.” FED. R. BANKR. P. 2019(a)(1). 

18 See Case Management Procedures, ¶ IV.A. One should note the verb “has taken” is in the present perfect tense, 

indicating the taking of a position currently or sometime in the past. 

19 See id. ¶ IV.A n.3. The term “Pleading” in turn defined as “[a]ll documents filed in these Title III Cases.” See 

id.¶ I.B. 

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I. Confusion May Exist Regarding Degree of Participation Required to Trigger Case 

Management Procedures Disclosure Requirements 

19. Currently, Rule 2019(b) Groups are providing inconsistent levels of disclosure 

regarding their interests in the Debtors. For example, while some Rule 2019(b) Groups in these 

cases have filed verified statements reporting interests held with respect to all the Debtors, other 

groups have filed verified statements reporting economic interests in only one Debtor. 

20. Under the Case Procedures Order, disclosure by a Rule 2019(b) Group of interests 

with respect to a single Debtor is appropriate in one of two scenarios: (a) the group is a creditor 

which holds interests solely with respect to that one Debtor and no other Debtors, or (b) the 

group holds interests both (i) with respect to the Debtor for which it has provided disclosure and 

(ii) with respect to another Title III Debtor (or Debtors) in whose case it has not taken a position. 

Thus, confusion regarding the degree of participation in a Title III case that constitutes “taking a 

position” could lead to inappropriate non-disclosure of interests. A Rule 2019(b) Group that 

erroneously believes it is has not taken a position in a particular Debtor’s Title III case would 

likely conclude that it was under no obligation to disclose interests held with respect to such 

Debtor. 

21. Indeed, the Committee understands, on information and belief (and based on 

information not known previously), that members of the GO Group may have at one time held 

and/or currently hold COFINA bonds that were not reported in any of the group’s Rule 2019 

statements filed with the court since July 13, 2017. The GO Group may believe that it has 

complied with the Case Management Procedures by filing Rule 2019 verified statements in 

which it reported economic interests solely with respect to the Commonwealth, perhaps on the 

theory that it has only “taken a position” in the Commonwealth’s Title III case. 

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22. In the Committee’s view, however, it is beyond peradventure that the GO Group 

has taken a position in COFINA’s case given, for example, its attempt to intervene in the 

adversary proceeding commenced by Bank of New York Mellon (and filed on the COFINA Title 

III Docket) to interplead sales-and-use tax funds,20 and its pervasive role in the CommonwealthCOFINA Dispute.21 This latter example includes the GO Group being a signatory of the 

Commonwealth-COFINA Dispute Stipulation dated August 10, 2017, thereby gaining automatic 

intervention rights in the Commonwealth-COFINA adversary proceeding, which proceeding 

directly involves both the Commonwealth and COFINA. 

23. Moreover, to the extent a member of the COFINA Senior Bondholders’ Coalition 

held or currently holds GO bonds issued by the Commonwealth, the COFINA Senior 

Bondholders’ Coalition apparently also believes it has no obligation to disclose such economic 

interests, despite its active involvement in the Commonwealth’s Title III case through, for 

example, its role litigating the Commonwealth-COFINA Dispute, including being a signatory of 

the Commonwealth-COFINA Dispute Stipulation dated August 10, 2017, thereby gaining 

automatic intervention rights in the Commonwealth-COFINA adversary proceeding, which 

proceeding directly involves both the Commonwealth and COFINA. Also, it appears that certain 

members of the COFINA Senior Bondholders’ Coalition, with the assistance of the group’s 

counsel, filed proofs of claim against the Commonwealth.22 It is unclear whether the COFINA 

Senior Bondholders’ Coalition holds or has ever held economic interests with respect to the 

 

20 See Motion of the Ad Hoc Group of General Obligation Bondholders for Leave to Intervene and Incorporated 

Memorandum of Law [Docket No. 16 in Adv. Proc. No. 17-133 (LTS), May 23, 2017]. 

21 As defined in Stipulation and Order Approving Procedure to Resolve Commonwealth-COFINA Dispute

[Docket No. 996, Aug. 10, 2017] (the “Commonwealth-COFINA Dispute Stipulation”); See Complaint in 

Intervention of the Ad Hoc Group of General Obligation Bondholders [Docket No. 96 in Adv. Proc. No. 17-257 

(LTS), Nov. 6, 2017]. 

22 See Proofs of Claim Nos. 25609, 26614, 26667, 26671, 27008, 27193, 27694, 27856, 30396, 30735, 31333, 

31979, 36251 and 37564. 

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Commonwealth, but if members of such group do hold or have held such interests, it would seem 

that their Rule 2019 statements should have included disclosure of the Commonwealth debt they 

hold or have held. 

24. Finally, the ERS Secured Creditors group has only disclosed interests held with 

respect to ERS despite having asserted claims against the Commonwealth through the 

commencement of an adversary proceeding and the filing of proofs of claim against the 

Commonwealth by each member of the group.23 It is unclear whether the ERS Secured Creditors 

group holds or has ever held economic interests with respect to the Commonwealth, but if 

members of such group do hold or have held such interests, it would seem that their Rule 2019 

statements should have included disclosure of the Commonwealth debt they hold or have held.24

II. Case Management Procedures Should Be Clarified to More Precisely Define What 

Actions Constitute Taking Position in Debtor’s Title III Case

25. Given the examples discussed above, the Committee believes the Case 

Management Procedures should be clarified to ensure that every Rule 2019(b) Group discloses 

its economic interests with respect to all Title III Debtors in whose cases the Rule 2019(b) Group 

has appeared in any capacity, including by means of the filing of informative motions, execution 

of court-approved stipulations, or the filing of proofs of claim, among other pleadings. 

26. This clarification can be accomplished, as set forth in Proposed Order A, by 

adding language to the Case Management Procedures that expressly identifies the actions 

 

23 See Adversary Complaint [Docket No. 767 (filed in the Commonwealth’s Title III case, Case No. 17 BK 3283 

(LTS))]; Proofs of Claim Nos. 20647, 21961, 24966, 25909, 26294, 26329, 28669, 27383, 28669, 31165, and 

32783. 

24 Or, if a Rule 2019 statement that was filed lacked the appropriate disclosure, the Rule 2019(b) Group should 

have filed a supplemental verified statement as per the Case Management Procedures, which require that, if any 

fact disclosed in a Rule 2019(b) Group’s most recently filed statement changes materially, “the Rule 2019(b) 

Group must file a supplemental verified statement contemporaneously with or within 48 hours after the next 

instance in which the Rule 2019 (b) Group takes a position before the court or solicits votes on the confirmation 

of a plan.” Case Management Procedures, ¶ IV.C. 

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described above as “taking a position” in a Debtor’s Title III case, (inserts are underlined and 

in bold): 

Every group, committee and entity described in Federal Rule of Bankruptcy 

Procedure 2019(b)(1) (each, a “Rule 2019(b) Group”), that, on or before August 

9, 2017, has taken a position before the Court3

 must file a verified statement that 

complies with the disclosure requirements enumerated by Federal Rule of 

Bankruptcy Procedure 2019 by August 24, 2017 at 5:00 p.m. (Atlantic Standard 

Time). For the avoidance of doubt and for the purposes of these Title III cases, 

compliance with Bankruptcy Rule 2019 includes disclosure of: (i) all economic 

interests with respect to each Debtor in whose Title III case the group, committee 

and/or entity has taken a position,4 including derivative interests, and (ii) the 

existence and amount of any bond insurance or other credit protection, including 

by a monoline insurer. 

3

For the avoidance of doubt, the phrase “takes a position before the Court” 

includes, but is not limited to, the filing of any Pleading in any Title III case or 

related adversary proceeding, including informative motion practice containing 

factual or legal representations or arguments. 

4

 For the avoidance of doubt, a party takes a position in the case of a Title III 

Debtor by appearing in such Debtor’s Title III case or related adversary 

proceeding in any capacity, including by, among other things, filing a 

Pleading, filing an informative motion, executing court-approved stipulation, 

filing a proof of claim, appearing at a hearing before the Court, or asserting 

any legal or factual positions that would in any way impact the property or 

rights of the Title III Debtor.

III. In Alternative, Blanket Disclosure Rule Should Be Imposed Requiring Disclosure 

Regarding Interests in All Title III Debtors

27. In the alternative, the Case Management Procedures could be amended to require 

that every Rule 2019(b) Group that has appeared in these Title III cases in any capacity disclose 

its economic interests with respect to all Title III Debtors, regardless of whether or not it has 

taken a position in a particular Title III case. This approach has the advantage of being simple 

and uniform—Rule 2019(b) Groups, other parties, and the court will not need to analyze the 

Case Management Procedures and parties’ pleadings and court representations to determine 

whether such parties have “taken a position,” because the disclosure requirements will be the 

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same for everyone. The Committee understands that the court may have decided not to impose 

this blanket disclosure requirement in its prior amendments to the Case Management Procedures, 

but, in light of the confusion regarding Rule 2019 disclosure obligations and the interlinked 

nature of the Title III cases, the Committee would submit that it is much simpler to establish this 

across-the-board rule, which would ensure compliance. Indeed, the various issues involving 

multiple Debtors, including the claw-back litigation (HTA and the Commonwealth), the ERS 

litigation (ERS and the Commonwealth), and the Commonwealth-COFINA Dispute (the 

Commonwealth and COFINA) demonstrate the intertwined nature of the Debtors’ cases and 

militate in favor of a simple across-the-board disclosure rule.

28. Under this alternative “bright line” approach, as set forth in Proposed Order B, 

the Case Management Procedures would be clarified as follows, (inserts are underlined and in 

bold and deletions are struck): 

Every group, committee and entity described in Federal Rule of Bankruptcy 

Procedure 2019(b)(1) (each, a “Rule 2019(b) Group”), that, on or before August 

9, 2017, has taken a position before the Court3 must file a verified statement that 

complies with the disclosure requirements enumerated by Federal Rule of 

Bankruptcy Procedure 2019 by August 24, 2017 at 5:00 p.m. (Atlantic Standard 

Time). For the avoidance of doubt and for the purposes of these Title III cases, 

compliance with Bankruptcy Rule 2019 includes disclosure of: (i) all economic 

interests with respect to each Debtor in whose Title III case the group, committee 

and/or entity has taken a position, including derivative interests, and (ii) the 

existence and amount of any bond insurance or other credit protection, including 

by a monoline insurer. “Debtor” as used in this paragraph refers to any entity 

that is a debtor under Title III of PROMESA. 

3

For the avoidance of doubt, the phrase “takes a position before the Court” 

includes appearing in any Title III case or related adversary proceeding in 

any capacity, including by, among other things, filing a Pleading, filing an 

informative motion, executing a court-approved stipulation, filing a proof of 

claim, appearing at a hearing before the Court, or asserting any legal or 

factual positions that would in any way impact the property or rights of any 

Debtor. but is not limited to, the filing of any Pleading, including informative 

motion practice containing factual or legal representations or arguments.

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IV. The Court Should Impose Disclosure Remedies for Past Failures to Provide 

Required Disclosure 

29. Finally, the Committee would also request that any Rule 2019(b) Groups that 

have failed to disclose required information in prior verified statements be required to file 

amended statements disclosing their past positions. The court has various options in this regard, 

for example it could (a) require that parties amend verified statements filed back to the date (July 

26, 2017) of the Rule 2019 Order (or the date (August, 17, 2017) of the court’s order amending 

the Case Management Procedures to add the Rule 2019 disclosure instructions that were 

proposed in the Rule 2019 Order); or (b) designate an alternative date from which such 

amendments would be required, such as the date (August 10, 2017) of the CommonwealthCOFINA Dispute Stipulation, or the date of a Rule 2019(b) Group’s intervention in the 

Commonwealth-COFINA adversary proceeding. Alternatively, the court could apply the 

clarification sought by the Committee prospectively. The Committee therefore requests that 

language be added to the Case Management Procedures to require the amendments of verified 

statements filed subsequent to a date of the court’s choosing.

30. The Committee requests that the court add the following Paragraph IV.D to the 

Case Management Procedures to address past failures to comply with Rule 2019: 

Any Rule 2019(b) Group that filed a verified statement after [ ], 2017 shall 

file an amended verified statement reflecting any economic interest (and any 

change in such economic interest from [ ], 2017 through the date of the 

addition of this paragraph to the Case Management Procedures), required to be 

disclosed pursuant to Paragraph IV.A, that was not disclosed in the previously 

filed verified statement. 

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CONCLUSION 

31. The Committee believes that entry of either of the Proposed Orders clarifying the 

Case Management Procedures will help ensure compliance with Rule 2019, promote a consistent 

and fair disclosure regime, and add vital transparency to Puerto Rico’s Title III cases. 

NO PRIOR REQUEST 

32. No previous request for the relief requested herein has been made to this or any 

other court, with the exception of the relief requested herein that was suggested in the 

Committee’s Informative Motion. 

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WHEREFORE, the Committee respectfully requests that the court enter Proposed 

Order A, attached hereto as Exhibit A, or, in the alternative, Proposed Order B, attached hereto 

as Exhibit B, granting the relief requested herein and granting any other relief as is just and 

proper. 

Dated: July 3, 2018 

 

/s/ Luc A. Despins .

PAUL HASTINGS LLP 

Luc. A. Despins, Esq. (Pro Hac Vice) 

James R. Bliss, Esq. (Pro Hac Vice)

James B. Worthington, Esq. (Pro Hac Vice) 

G. Alexander Bongartz, Esq. (Pro Hac Vice) 

200 Park Avenue 

New York, New York 10166 

Telephone: (212) 318-6000 

lucdespins@paulhastings.com 

jamesbliss@paulhastings.com 

jamesworthington@paulhastings.com 

alexbongartz@paulhastings.com 

Counsel to the Official Committee of Unsecured 

Creditors

- and - 

/s/ Juan J. Casillas .

CASILLAS, SANTIAGO & TORRES LLC 

Juan J. Casillas Ayala, Esq., USDC - PR 218312 

Diana M. Batlle-Barasorda, Esq., USDC - PR 213103 

Alberto J. E. Añeses Negrón, Esq., USDC - PR 302710 

Ericka C. Montull-Novoa, Esq., USDC - PR 230601 

El Caribe Office Building 

53 Palmeras Street, Ste. 1601 

San Juan, Puerto Rico 00901-2419 

Telephone: (787) 523-3434 

jcasillas@cstlawpr.com 

dbatlle@cstlawpr.com 

aaneses@cstlawpr.com 

emontull@cstlawpr.com 

Local Counsel to the Official Committee of Unsecured 

Creditors

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