Exhibit 1 

Stipulation 

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Execution Version 

UNITED STATES DISTRICT COURT 

DISTRICT OF PUERTO RICO 

-------------------------------------------------------------x 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, et al., 

 Debtors.1

-------------------------------------------------------------x 

PROMESA 

Title III 

No. 17 BK 3283-LTS 

(Jointly Administered) 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

 as representative of 

THE COMMONWEALTH OF PUERTO RICO

 Debtor. 

-------------------------------------------------------------x 

PROMESA 

Title III 

No. 17 BK 3283-LTS 

STIPULATION BETWEEN 

THE COMMONWEALTH OF PUERTO RICO AND CBA COUNTERPARTIES 

REGARDING CERTAIN GRIEVANCE AND ARBITRATION PROCEDURES 

This stipulation (the “Stipulation”) is made as of March 6, 2018, by and between the 

Commonwealth of Puerto Rico (the “Commonwealth”) and the American Federation of Teachers, 

                                                            

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 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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AFL-CIO and the American Federation of State, County and Municipal Employees, on behalf of 

themselves and their local affiliates in Puerto Rico (collectively, “CBA Counterparties”).2 

RECITALS 

WHEREAS, on May 3, 2017, the Commonwealth, by and through the Oversight Board, 

as the Commonwealth’s representative pursuant to PROMESA section 315(b), filed a petition with 

the United States District Court for the District of Puerto Rico (the “District Court”) under title III 

of PROMESA (the “Title III Case”); 

WHEREAS, since July 28, 2017, the Commonwealth and the CBA Counterparties have 

been engaged in discussions regarding modifying the automatic stay under Bankruptcy Code 

sections 362(a) and 922(a), made applicable to the Title III Case by PROMESA section 301(a) 

(the “Title III Stay”) with respect to grievances and arbitrations arising from prepetition conduct 

brought under the grievance and arbitration procedures in collective bargaining agreements 

between the Commonwealth and the CBA Counterparties, or under applicable statutes; 

WHEREAS, the Commonwealth believes grievances and arbitrations arising from 

prepetition conduct are subject to the Title III Stay, and the CBA Counterparties do not, by this 

Stipulation, concede the applicability of the Title III Stay to such grievances and arbitrations; and 

WHEREAS, the Commonwealth and the CBA Counterparties, without conceding the 

applicability of the Title III Stay, have agreed to modify the Title III Stay as set forth herein. 

NOW THEREFORE, IT IS HEREBY STIPULATED AND AGREED, by and among 

the Commonwealth and the CBA Counterparties, through their counsel, each of whom represent 

and warrant they possess the requisite authority to bind the respective parties hereto, as follows: 

                                                            

2

 The Financial Oversight and Management Board for Puerto Rico (the “Oversight Board”), as the Debtors’ 

representative pursuant to section 315(b) of the Puerto Rico Oversight, Management, and Economic Stability Act

(“PROMESA”), has authorized the Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”) to 

enter into this Stipulation on behalf of the Commonwealth. 

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1. Subject to the terms herein, the Title III Stay is hereby modified solely to the limited 

extent necessary to permit matters arising from prepetition conduct brought under the grievance 

and arbitration procedures in collective bargaining agreements between the Commonwealth and 

the CBA Counterparties, or under applicable statutes, including but not limited to Law 184-2004, 

Law 32-1972, Law 8-2017, and Act 45-1998 (collectively, the “Prepetition Actions”) to proceed 

through the grievance handling process and to arbitration, or similar administrative process in the 

case of actions under applicable statutes, through final resolution, including any appeal rights 

parties may have (a “Disposition”) whether it is an award (the “Award”), administrative decision 

(“Decision”), judicial decision (“Judgment”), or settlement. To the extent that a Disposition of a 

Prepetition Action provides for equitable relief, including reinstatement or reclassification, it shall 

not be subject to any challenge based on the application of the automatic stay. 

2. The Commonwealth and the CBA Counterparties have discussed the potential for 

certain grievances, arbitrations, or similar processes that may affect the fiscal plan for the 

Commonwealth (the “Fiscal Plan”) or any of the cases that have been commenced under Title III 

of PROMESA in the District Court (referred to herein as the “Title III Cases”). The 

Commonwealth and the CBA Counterparties agree that if the Commonwealth believes that a 

Prepetition Action affects the Fiscal Plan, the Commonwealth, through AAFAF by its counsel, 

may send a notice to the appropriate CBA Counterparty, by its counsel, identifying the Prepetition 

Action and providing a brief summary of the manner in which the Commonwealth believes the 

Fiscal Plan is affected. Upon receipt of a notice from the Commonwealth pursuant to the preceding 

sentence, the grievance or arbitration or similar process shall be stayed and the affected CBA 

Counterparty may file a motion for relief from the Title III Stay in accordance with the Case 

Management Procedures, and the grievance or arbitration or similar process shall not proceed until 

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the District Court hears such motion, which the parties agree shall be heard on an urgent basis if 

the District Court consents. 

3. Notwithstanding the foregoing, the Commonwealth believes that the following 

categories of Prepetition Actions would have an impact on the Fiscal Plan or the Title III Cases 

and such actions shall continue to be subject to the Title III Stay (subject to the CBA 

Counterparties’ right to file a motion for relief from the Title III Stay for such actions in accordance 

with the protocol set forth in the Third Amended Notice, Case Management and Administrative 

Procedures [ECF No. 1512-1] (the “Case Management Procedures”)): (i) Prepetition Actions that 

challenge the constitutionality, or where the remedy would impede or be inconsistent with the 

implementation, of any Commonwealth statute that is essential for the Fiscal Plan to succeed, 

including, but not limited to: Act 2-2017 (Act to delegate to AAFAF the power to revise matters 

including, but not limited to, agreements, transactions, and regulations of the agencies and 

instrumentalities of the Government of Puerto Rico), Act 3-2017 (Act to respond to the Economic, 

Fiscal and Budgetary Crisis and to Guarantee the Functioning of the Government of Puerto Rico); 

Act 8-2017 (Act for the Administration and Transformation of the Human Resources of the 

Government of Puerto Rico); Act 26-2017 (Act to Comply with the Fiscal Plan); and Act 66-2014 

(Special Act for the Fiscal and Operational Sustainability of the Government of Puerto Rico), 

which was ratified and amended by Act 3-2017 (hereinafter individually and collectively the 

“Commonwealth Statutes”); all of which the Commonwealth asserts (without prejudice to the 

CBA Counterparties) left without effect or superseded some of the provisions of the collective 

bargaining agreements of the CBA Counterparties, as well as any other Commonwealth statute, 

regulation, policy, or practice that contravene or are inconsistent with the provisions of such 

collective bargaining agreements; and (ii) Prepetition Actions that seek injunctive relief that would 

thwart the implementation of public policy or the administrative rights of the Commonwealth’s 

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agencies other than reinstatement. The parties further agree that any Prepetition Actions solely 

involving disciplinary discharge (including but not limited to any disciplinary discharge for 

unsatisfactory performance) or other types of discipline of a Commonwealth employee shall not 

be subject to the Title III Stay. The Commonwealth agrees to meet and confer with the CBA 

Counterparties from time to time with respect to Prepetition Actions that continue to be subject to 

the Title III Stay. 

4. The Commonwealth and the CBA Counterparties agree that the Commonwealth’s 

failure to notify the CBA Counterparties does not waive the Commonwealth’s rights to challenge 

the grievance, arbitration, or similar process and to claim that any Award or settlement or other 

Disposition should not be enforced because it affects the Fiscal Plan, including, without limitation, 

the right to (i) challenge the jurisdiction of the arbitrator or other forum, (ii) defend the grievance 

on the merits, (iii) defend against the grievance as a violation of the Fiscal Plan or PROMESA, 

(iv) appeal a determination of the arbitration or other forum, and (v) seek relief from the District 

Court. 

5. To the extent that any Disposition of a Prepetition Action includes a liquidated 

damage claim amount (a “Liquidated Amount”), such Liquidated Amount shall not be collected 

from the Commonwealth but shall be treated as a liquidated claim under a plan of adjustment for 

the Commonwealth (a “Plan”) and/or any cure process established under such Plan or under 

section 365(b) of the Bankruptcy Code, except to the extent that the Commonwealth chooses to 

pay or agree to a payment arrangement for such Liquidated Amount, subject to the 

Commonwealth’s and the CBA Counterparties’ rights regarding the classification and treatment 

of any such liquidated claim. Absent agreement of the Commonwealth to make such payment or 

payment arrangement (which shall be reflected in a communication from counsel for the Oversight 

Board and AAFAF), no steps shall be taken by the CBA Counterparties, any individual union, any 

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affiliate local union, any grievant, or any member of any union to enforce any liquidated amount 

except through the claims resolution process to be undertaken in the Title III Case. Without 

limitation, the foregoing also applies to any grievances that raise contractual issues that affect labor 

costs (such as grievances that challenge layoffs, seek reinstatement of employees in other than 

solely disciplinary cases, or seek retroactive adjustments in wage rates). Absent the express written 

consent of the Commonwealth (which shall be reflected in a communication from counsel for the 

Oversight Board and AAFAF), any such adjustments affecting labor costs, including retroactive 

(but not prospective) wage adjustments, will be deemed a claim and subject to the claims resolution 

process to be undertaken in the Title III Case. 

6. Nothing contained in this Stipulation shall operate as a waiver or modification of 

the Title III Stay so as to permit the prosecution against the Commonwealth or any of the other 

Title III Debtors of any claim or claims by anyone other than the CBA Counterparties as provided 

for herein. The Commonwealth and the CBA Counterparties preserve all rights and defenses, 

including any procedural or substantive arbitrability defense, that the Commonwealth and CBA 

Counterparties may have in any Prepetition Action covered under this Stipulation. The 

Commonwealth and CBA Counterparties also reserve all rights, including, but not limited to, the 

right to challenge the jurisdiction of any matter. Without limiting the foregoing, and 

notwithstanding the provisions of paragraphs 1-5, the Commonwealth reserves the right to set 

aside, defend against any action to enforce, or otherwise challenge any Award or Decision that, 

individually or collectively with other Awards or Decisions, is alleged to (i) violate any applicable 

Puerto Rico or Federal statute or resolution, including but not limited to PROMESA and the 

Commonwealth Statutes, or (ii) violate the Fiscal Plan. The CBA Counterparties reserve all rights 

to oppose any such action to set aside, challenge or defend against enforcement of any such Award 

or Decision and the ability to challenge any grievance that, individually or collectively with other 

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grievances, impacts the Fiscal Plan or the Title III Cases. The CBA Counterparties also reserve 

all of their rights with respect to the foregoing. 

7. The Commonwealth and the CBA Counterparties agree that any grievances and 

arbitrations arising from postpetition conduct brought under the grievance and arbitration 

provisions in collective bargaining agreements between the Commonwealth and the CBA 

Counterparties, or under applicable statutes, including, but not limited to, Law 184-2004, Law 32-

1972, Law 8-2017, and Act 45-1998, shall proceed in the ordinary course. 

8. The Commonwealth and the CBA Counterparties represent and warrant that they 

are properly and fully empowered to enter into and execute this Stipulation, that they know of no 

contractual commitment or legal limitation of, impediment to, or prohibition against their entry 

into this Stipulation, and that the Stipulation is legal, valid, and binding upon them. 

9. Neither this Stipulation, nor the settlement provided for herein, nor any statement 

made, action, or position taken, or document prepared or executed in connection with the 

negotiation, execution, or implementation of this Stipulation shall be deemed to be, or construed 

as, (a) an admission by any party of any liability, wrongdoing, act, or matter or that any claim or 

defense has or lacks merit; (b) a waiver of the Commonwealth’s rights to dispute, contest, set off, 

or recoup any claim, including any claims currently pending in the Prepetition Actions, or assert 

any related rights, claims, or defenses and all such rights are reserved; or (c) an approval or 

assumption of any agreement or contract between the parties under Bankruptcy Code section 365. 

10. This Stipulation contains the entire agreement by and between the parties with 

respect to the subject matter hereof, and all prior understandings or agreements, if any, are merged 

into this Stipulation. 

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11. This Stipulation shall be construed and interpreted in accordance with the laws of 

Puerto Rico. For purposes of construing this Stipulation, neither of the parties shall be deemed to 

have been the drafter of the Stipulation. 

12. Electronic copies of signatures on this Stipulation are acceptable, and an electronic 

copy of a signature on this Stipulation is deemed an original. This Stipulation may be executed in 

counterparts, each of which is deemed an original, but when taken together constitute one and the 

same document. 

13. This Stipulation may not be modified other than by a signed writing executed by 

the parties hereto. 

14. The District Court shall retain jurisdiction to hear any matters or disputes arising 

from or relating to this Stipulation. 

15. This Stipulation shall be immediately effective and enforceable upon entry of an 

order of the District Court approving the terms hereof. 

Remainder of Page Intentionally Left Blank 

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IN WITNESS WHEREOF and in agreement herewith, by and through their counsel, the 

parties have executed and delivered this Stipulation as of the date first set forth above. 

/s/ Peter Friedman 

John Rapisardi 

Suzzanne Uhland 

Peter Friedman 

Diana M. Perez 

(Admitted Pro Hac Vice) 

O’MELVENY & MYERS LLP 

7 Times Square 

New York, NY 10036 

Tel: (212) 326-2000 

Fax: (212) 326-2061 

Attorneys for the Puerto Rico Fiscal Agency 

and Financial Advisory Authority 

/s/ Mohammad S. Yassin 

Mohammad S. Yassin 

USDC-PR Bar No. 302909 

PUERTO RICO FISCAL AGENCY AND 

FINANCIAL ADVISORY AUTHORITY 

Robert Sánchez Vilella (Minillas) 

Government Center 

De Diego Avenue, Stop 22 

San Juan, Puerto Rico 00907 

Tel: (787) 722-2525 

Fax: (787) 721-1443 

Chief Legal & Regulatory Officer 

 

/s/ José Luis Barrios-Ramos 

José Luis Barrios-Ramos, Esq. 

McLeary Ave., Suite #303 

San Juan, Puerto Rico 00936-8006 

Tel.: (787) 593-6641 

Barrios.jl@outlook.com 

and 

/s/ Curtis C. Mechling 

Curtis C. Mechling 

Sherry J. Millman 

Stroock & Stroock & Lavan LLP 

180 Maiden Lane, New York, NY 10038 

(212) 806-5434 

smillman@stroock.com 

For American Federation of Teachers, 

AFL-CIO, as authorized agent for the 

Asociación de Maestros de Puerto 

Rico-Local Sindical 

/s/ Sharon L. Levine 

Sharon L. Levine 

Dipesh Patel 

Saul Ewing LLP 

1037 Raymond Blvd. 

Suite 1520 

Newark, NJ 07102 

(973) 286-6713 

slevine@saul.com 

For the American Federation of State, 

County and Municipal Employees

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Judith Rivlin 

Teague P. Paterson 

Matthew S. Blumin 

American Federation of State, County and 

Municipal Employees 

1101 17th Street NW, Suite 900 

Washington, DC 20011 

(202) 775-5900 

For the American Federation of State, 

County and Municipal Employees

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