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

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

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

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In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO,

as representative of

THE COMMONWEALTH OF PUERTO RICO, et al.

Debtor.

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In re:

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO

as representative of

THE EMPLOYEES RETIREMENT SYSTEM OF THE 

GOVERNMENT OF THE COMMONWEALTH OF 

PUERTO RICO,

Debtor.

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PROMESA

Title III

Case No. 3:17-bk-03283 (LTS)

PROMESA

Title III

Case No. 3:17-cv-01685 (LTS) 

Case No. 3:17-bk-03566 (LTS) 

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

MOTION OF CERTAIN SECURED CREDITORS OF THE EMPLOYEES 

RETIREMENT SYSTEM OF THE GOVERNMENT OF THE 

COMMONWEALTH OF PUERTO RICO 

FOR RELIEF FROM THE AUTOMATIC STAY 

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TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT ................................................................................................... 1

FACTUAL BACKGROUND........................................................................................................ 3

PROCEDURAL BACKGROUND................................................................................................ 4

ARGUMENT................................................................................................................................. 8

I. Title III Of PROMESA Instructs Courts To Lift The Automatic Stay In The 

Absence Of Adequate Protection....................................................................................... 8

II. Movants Have Constitutionally-Protected Interests In Property Of ERS.......................... 8

III. Movants’ Property Interests Are Not Adequately Protected ........................................... 10

IV. Movants Request A Prompt Hearing On The Motion To Lift The Automatic Stay........ 11

CONCLUSION............................................................................................................................ 12

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TABLE OF AUTHORITIES

Page(s)

CASES

Grella v. Salem Five Cent Sav. Bank,

42 F.3d 26 (1st Cir. 1994)........................................................................................................10

In re Bailey,

574 B.R. 15 (Bankr. D. Me. 2017)...........................................................................................11

In re Bldrs. Grp. & Dev. Corp,

502 B.R. 95 (Bankr. D.P.R. 2013)...........................................................................................10

In re Buehne Farms, Inc.,

No. 04-32052, 2005 WL 2456867 (Bankr. S.D. Ill. Apr. 26, 2005)........................................11

Matter of Vitreous Steel Products Co.,

911 F.2d 1223 (7th Cir. 1990) .................................................................................................10

Peaje Invs. LLC v. García-Padilla,

845 F.3d 505 (1st Cir. 2017)..................................................................................................5, 8

STATUTORY AUTHORITIES

11 U.S.C. § 361..............................................................................................................................10

11 U.S.C. § 362...................................................................................................................... passim

28 U.S.C. § 1331..............................................................................................................................3

28 U.S.C. § 1391..............................................................................................................................3

48 U.S.C. § 2161........................................................................................................................1, 10

48 U.S.C. § 2166..............................................................................................................................3

48 U.S.C. § 2167..............................................................................................................................3

P.R. Laws Ann. tit. 3, § 761 (2016).................................................................................................3

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Movants,1 all of whom are secured creditors of the Employees Retirement System of the 

Government of the Commonwealth of Puerto Rico (“ERS”), respectfully move for relief from the 

automatic stay imposed pursuant to Title III of the Puerto Rico Oversight, Management, and 

Economic Stability Act (“PROMESA”), see 48 U.S.C. § 2161(a) (incorporating 11 U.S.C. § 362) 

in both Case No. 3:17-bk-03283 and Case No. 3:17-bk-03566 or, in the alternative, for adequate 

protection of their liens on property of ERS, in which the Commonwealth of Puerto Rico now 

claims an interest.2 In support of the Motion, Movants state as follows:

PRELIMINARY STATEMENT

1. This motion for relief from the automatic stay is a request to maintain the status 

quo pending this Court’s resolution of the cross-motions for summary judgment in FOMB ex rel. 

ERS v. Altair Global Credit Opportunities Fund (A), LLC, et al., Adv. Proc. No. 17-00213 (the 

“Adversary Proceeding”).

2. As this Court is aware, shortly after the filing of ERS’s Title III petition, Movants 

filed a motion for adequate protection of their constitutionally-protected and bargained-for 

 1 Movants include Altair Global Credit Opportunities Fund (A), LLC, Andalusian Global 

Designated Activity Company, Glendon Opportunities Fund, L.P., Mason Capital Master Fund 

L.P., Nokota Capital Master Fund, L.P., Oaktree-Forrest Multi- Strategy, LLC (Series B), Oaktree 

Opportunities Fund IX, L.P., Oaktree Opportunities Fund IX (Parallel 2), L.P., Oaktree Value 

Opportunities Fund, L.P., Ocher Rose, L.L.C., SV Credit, L.P., Puerto Rico AAA Portfolio Bond 

Fund, Inc., Puerto Rico AAA Portfolio Bond Fund II, Inc., Puerto Rico AAA Portfolio Target 

Maturity Fund, Inc., Puerto Rico Fixed Income Fund, Inc., Puerto Rico Fixed Income Fund II, Inc., 

Puerto Rico Fixed Income Fund III, Inc., Puerto Rico Fixed Income Fund IV, Inc., Puerto Rico 

Fixed Income Fund V, Inc., Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc., 

Puerto Rico Investors Bond Fund I, Puerto Rico Investors Tax-Free Fund, Inc., Puerto Rico 

Investors Tax-Free Fund, Inc. II, Puerto Rico Investors Tax-Free Fund III, Inc., Puerto Rico 

Investors Tax-Free Fund IV, Inc., Puerto Rico Investors Tax-Free Fund V, Inc., Puerto Rico 

Investors Tax- Free Fund VI, Inc., Puerto Rico Mortgage-Backed & U.S. Government Securities 

Fund, Inc., Tax-Free Puerto Rico Fund, Inc., Tax-Free Puerto Rico Fund II, Inc., and Tax-Free 

Puerto Rico Target Maturity Fund, Inc.

2 A proposed order is attached as Exhibit A.

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property interests. See No. 17-bk-03566, Dkt. 26 (May 31, 2017). On July 14, 2017, Movants, 

the Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), and the Oversight 

Board (in its capacity as representative of ERS) mooted that motion by entering into a Joint 

Stipulation that provided Movants with certain protections, including the payment of current 

interest due on the ERS Bonds from a Prepetition Segregated Account (as defined by the Joint 

Stipulation) and monthly deposits of $18.5 million from June through October 2017 into a newlycreated Post-Petition Segregated Account (as defined by the Joint Stipulation) (collectively, the 

“Interim ERS Bondholder Protections”). See No. 17-bk-03566, Dkt. 170 (July 14, 2017). The 

parties agreed that the Interim ERS Bondholder Protections would constitute adequate protection 

until October 31, 2017, solely with respect to the imposition of the automatic stay. Id. The Court 

approved the Joint Stipulation on July 17, 2017. See No. 17-bk-03566, Dkt. 171 (July 17, 2017).

3. On December 28, 2017, the Court entered an order interpreting the Joint Stipulation 

and enjoining AAFAF from prematurely ending those Interim ERS Bondholder Protections. 

No. 17-bk-03566, Dkt. 248 (Dec. 28, 2017). In particular, the Court required ERS to transfer 

approximately $27.7 million from the Prepetition Segregated Account to the Fiscal Agent in order 

to pay the interest due on the ERS Bonds in December 2017 and January 2018, and to thereafter 

continue to transfer $13,876,582.48 from the Prepetition Segregated Accounts on a monthly basis 

in order to make payments equal to the contractual monthly interest due and payable on the ERS 

Bonds until either (a) the Court ruled on the parties’ cross-motions for summary judgment in the 

Adversary Proceeding or (b) “the exhaustion of funds in the Prepetition Segregated Account.” Id. 

4. The parties’ cross-motions for summary judgment in the Adversary Proceeding are 

still pending. But the Prepetition Segregated Account will run out of funds in August 2018, leaving 

Movants’ constitutionally-protected property interests completely unprotected. Movants’ efforts 

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to obtain a consensual extension of the Interim ERS Bondholder Protections while the Adversary 

Proceeding remains pending have been unsuccessful. Counsel to AAFAF and the Oversight Board 

have not responded to Movants’ request. See Letter to Paul V. Possinger and Suzzanne Uhland 

(June 27, 2018) (attached as Exhibit B). Movants thus move for relief from the automatic stay 

under § 362(d)(1) of the Bankruptcy Code.

JURISDICTION AND VENUE

5. This Court has jurisdiction over this Motion pursuant to 28 U.S.C. § 1331 and 48 

U.S.C. § 2166(a).

6. Venue is proper in this Court pursuant to 28 U.S.C. § 1391(b) and 48 U.S.C. 

§ 2167(a).

FACTUAL BACKGROUND

7. ERS is a trust created by the Commonwealth in 1951 to provide pension and other 

benefits to officers and employees of the government of the Commonwealth, members and 

employees of the Legislature of the Commonwealth, and officers and employees of public 

corporations and municipalities of the Commonwealth. P.R. Laws Ann. tit. 3, § 761 (2016).

8. Pursuant to authority granted in its Enabling Act, ERS issued ERS Bonds in 2008 

in order to increase the funds available to pay pension benefits to certain of its beneficiaries and to 

reduce its unfunded accrued actuarial pension liability. Many ERS Bonds were sold to individual 

residents of the Commonwealth and local businesses, and are still held by those persons and 

entities. Movants hold approximately $2 billion of the Outstanding Amount of the ERS Bonds.

9. As security for the ERS bonds, ERS granted the ERS Bondholders, through the 

Fiscal Agent, a security interest in and lien on certain property of ERS (“Pledged Property”), 

including (a) all “Revenues,” including, among other things, all employer contributions received 

by ERS or the Fiscal Agent “and any assets in lieu thereof or derived thereunder which are payable 

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to [ERS] pursuant to [the Enabling Act]”; (b) all “right, title, and interest of [ERS] in and to” the 

property described in (a) and “all rights to receive the same”; (c) the funds, accounts, and 

subaccounts held by the Fiscal Agent; (d) any and all other rights and personal property of every 

kind pledged and assigned by ERS for additional security; and (e) “any and all cash and non-cash 

proceeds, products, offspring, rents and profits from any of the Pledged Property,” including, 

“without limitation, those from the sale, exchange, transfer, collection, loss, damage, disposition, 

substitution or replacement of” such property. ERS Bond Resolution § 501 & Exh. B, VI-33, VI36, VI-37. Under the ERS Bond Resolution, employer contributions are to be used to pay 

bondholders first, and then to pay beneficiaries. Id. § 501 & Exh. B, VI-36. 

10. On May 3, 2017, the Oversight Board filed a petition in this Court commencing a 

case under Title III of PROMESA on behalf of the Commonwealth.

11. On May 21, 2017, the Oversight Board filed a petition in this Court commencing a 

case under Title III of PROMESA on behalf of ERS.

PROCEDURAL BACKGROUND

12. The initial PROMESA automatic stay commenced on June 30, 2016. After the 

Commonwealth and ERS denied their request for adequate protection, Movants filed a motion 

before the United States District Court for the District of Puerto Rico to lift the initial PROMESA 

stay for “cause” unless the Commonwealth and ERS provided adequate protection. Altair Global 

Credit Opportunities Fund (A), L.L.C., et al. v. Governor Alejandro García Padilla, et al., No. 16-

cv-2696, Dkt. 1 (Sept. 21, 2016). The Commonwealth and ERS opposed the motion, arguing, 

inter alia, that Movants were adequately protected because of their “valid and enforceable liens 

over hundreds of millions of dollars of ERS revenue, which [would] continue to grow.” 3 

 3 See, e.g., Respondent Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico’s Brief in Opposition to Motion for Relief From the PROMESA 

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Specifically relying upon these statements, the District Court denied the motion. On appeal, the 

First Circuit vacated the denial and remanded the case for further proceedings on the question of 

whether Movants were adequately protected. Peaje Invs. LLC v. García-Padilla, 845 F.3d 505, 

509, 514 (1st Cir. 2017). 

13. At that point, the parties entered into a stipulation to settle Movants’ request for 

adequate protection. Order Approving Stipulation, Setting Aside Hearing And Dismissing Case, 

No. 16-cv-2696, Dkt. 83 (Jan. 17, 2017). Pursuant to the stipulation, all employer contributions 

“received by ERS during the pendency of the stay imposed pursuant to § 405 of PROMESA” were 

to be “transferred by the ERS to an account (the “Segregated Account”) for the benefit of the 

holders of the ERS Bonds . . . at Banco Popular de Puerto Rico.” Id. at 1-2. The parties agreed 

that the “Segregated Account, the Employers’ Contributions therein and any interest thereon . . . 

constitute Pledged Property under the ERS Bond Resolution”; are “subject to the pledge and 

assignment of, and the grant of a security interest in and over, the Pledged Property set forth in the 

ERS Bond Resolutions”; and are “subject to a security interest and lien with the same validity, 

perfection, priority and enforceability and subject to the same defenses, if any, as the Pledged 

Property currently on deposit with the Fiscal Agent.” Id. at 3.

14. On April 11, 2017, the parties entered into yet another stipulation, whereby ERS 

agreed to “transfer to the Fiscal Agent for the payment of interest on the ERS Bonds, no later than 

April 20, 2017, those amounts from the Segregated Account necessary to pay interest on the ERS 

 Automatic Stay in Altair Global Credit Opportunities Fund (A), L.L.C., et al. v. Governor 

Alejandro García Padilla, et al., No. 16-cv-2696, Dkt. 52, at 10 (Oct. 26, 2016); Respondents’ 

Brief in Opposition to Motion for Relief From the PROMESA Automatic Stay in Altair Global 

Credit Opportunities Fund (A), L.L.C., et al. v. Governor Alejandro García Padilla, et al., No. 16-

cv-2696, Dkt. 53, at 5(Oct. 26, 2016).

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Bonds due and payable on May 1, 2017.” Joint Stipulation and Order, No. 16-cv-2696, Dkt. 86, 

at 3 (Apr. 11, 2017). 

15. On May 22, the day after ERS commenced its Title III case, AAFAF delivered a 

notice to the Fiscal Agent seeking to block the Fiscal Agent’s payment of the June 1 interest 

payment in contravention of the April stipulation. After failed attempts to resolve the issue, on 

May 31, 2017, Movants filed a motion for adequate protection. See Motion of Certain Secured 

Creditors of the Employees Retirement System of the Government of the Commonwealth of Puerto 

Rico Request for Adequate Protection and for Relief from the Automatic Stay, No. 3:17-cv-01685, 

Dkt. 26 (May 31, 2017). The parties resolved the motion through the Joint Stipulation approved 

by the Court on July 17, 2017. No. 17-bk-03566, Dkt. 171; see supra ¶ 2. 

16. The Joint Stipulation provided that “[i]nterest on the ERS Bonds shall be paid when 

due through the interest payment due on October 1, 2017 from the prepetition segregated account 

established pursuant to the Order and Stipulation dated January 17, 2017 (the ‘Prepetition 

Segregated Account’) commencing with the interest payment that became due on July 1, 2017.” 

No. 17-bk-03566, Dkt. 170 at 4. The Joint Stipulation also authorized the creation of a new, postpetition segregated account (called the “Post-Petition Segregated Account”), in which ERS agreed 

to make deposits in accordance with the following schedule:

Date Amount

On the second business day after the entry of

an order approving this Stipulation

Amount of Employers’ Contributions (as

defined in the ERS Bond Resolutions) actually 

received by ERS from May 22, 2017 through 

and including May 31, 2017.

On the second business day after the entry of 

an order approving this Stipulation

$18,500,000

On each of July 31, August 31, and September 

30, 2017, and October 31, 2017

$18,500,000

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17. On December 28, 2017, the Court issued an order interpreting the Joint Stipulation 

and confirming that AAFAF could not cease providing the Interim ERS Bondholder Protections. 

No. 17-bk-03566, Dkt. 248 (Dec. 28, 2017). Through that Order, the Court required ERS to 

transfer approximately $27.7 million from the Prepetition Segregated Account to the Fiscal Agent 

in order to make payments equal to the contractual amount of interest due and payable on the ERS 

Bonds in December 2017 and January 2018. The Court further required that ERS continue to 

transfer $13,876,582.48 from the Prepetition Segregated Accounts to the Fiscal Agent on a 

monthly basis, starting in January 2018, in order to make payments equal to the contractual amount 

of interest due and payable on the ERS Bonds. That obligation remained in effect until either 

(a) the Court ruled on the parties’ cross-motions for summary judgment in the Adversary 

Proceeding, or (b) “the exhaustion of funds in the Prepetition Segregated Account.” All rights 

with respect to adequate protection were expressly reserved. Id. at ¶ 6.

18. The parties’ cross-motions for summary judgment in the Adversary Proceeding 

remain pending. According to AAFAF’s most recent summary of bank account balances for the 

Government of Puerto Rico and its instrumentalities, however, the Prepetition Segregated Account 

contained only $19.9 million as of May 31, 2018.4

 As a result, there are insufficient funds to make 

a full $13.8 million transfer to the Fiscal Agent in July, which means that the Fiscal Agent will be 

unable to make the requisite payment due on the ERS Bonds in August. In light of this upcoming 

exhaustion of funds, Movants attempted to negotiate a consensual extension of the Interim ERS 

Bondholder Protections to maintain the status quo. See Exhibit B. Counsel to AAFAF and counsel 

to the Oversight Board did not respond to Movants’ proposal. This Motion followed.

 4 See Summary of Bank Account Balances for the Government of Puerto Rico and its 

Instrumentalities, Information as of May 31, 2018 (publicly filed June 18, 2018), available at

http://www.aafaf.pr.gov/assets/aafaf-bank-account-balances-government-pr-instrum-05-31-

2018.pdf.

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ARGUMENT

I. Title III of PROMESA Instructs Courts To Lift The Automatic Stay In The Absence 

Of Adequate Protection.

19. Adequate protection is a constitutional imperative. As the First Circuit explained, 

“prior to the enactment of the current bankruptcy stay provision, the Supreme Court had 

recognized that creditors are constitutionally entitled to protection to the extent of the value of 

their property.” Peaje Investments, 845 F.3d at 511 (internal citations and alteration omitted).

20. Thus, Section 362(d)(1) of the Bankruptcy Code, incorporated into PROMESA, 

states that, “[o]n request of a party in interest and after notice and a hearing, the court shall grant 

relief from the stay . . . such as by terminating, annulling, modifying, or conditioning such stay . . . 

for cause, including the lack of adequate protection of an interest in property of such party in 

interest.” 11 U.SC. § 362(d)(1) (emphasis added).

21. In a hearing for relief from the automatic stay, ERS as the debtor bears the burden 

of proof on the question of adequate protection. See 11 U.S.C. § 362(g) (“In any hearing . . . 

concerning relief from the stay . . . the party requesting such relief has the burden of proof on the 

issue of the debtor’s equity in property; . . . and the party opposing such relief has the burden of 

proof on all other issues”). Indeed, if ERS fails to meet this burden, the automatic stay is lifted by 

operation of statute. See 11 U.S.C. § 362(e)(1).

II. Movants Have Constitutionally-Protected Interests In Property Of ERS.

22. As this Court and the First Circuit have already recognized, Movants hold a 

constitutionally-protected property interest, unless and until this Court rules otherwise in the 

Adversary Proceeding. The ERS Bond Resolution provides for the “pledge and assignment of, 

and the grant of a security interest in and over, the Pledged Property.” ERS Bond Resolution 

§ 501.1 & Exh. B, VI-36. “Pledged Property” is defined broadly to include (a) all “Revenues,” 

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including, among other things, all employer contributions received by ERS or the Fiscal Agent 

“and any assets in lieu thereof or derived thereunder which are payable to [ERS] pursuant to [the 

Enabling Act]”; (b) all “right, title, and interest of [ERS] in and to” all of the property described 

in (a) and “all rights to receive the same”; (c) the funds, accounts, and subaccounts held by the 

Fiscal Agent; (d) any and all other rights and personal property of every kind pledged and assigned 

by ERS for additional security; and (e) “any and all cash and non-cash proceeds, products, 

offspring, rents and profits from any of the Pledged Property,” including, “without limitation, those 

from the sale, exchange, transfer, collection, loss, damage, disposition, substitution or replacement 

of” such property. Id. § 501 & Exh. B, VI-33, VI-36, VI-37.

23. It is unsurprising, then, that ERS, the Commonwealth, and the Oversight Board all 

previously acknowledged the breadth of Movants’ security interests and liens. In prior 

proceedings, ERS described Movants’ lien as one with “access to the full revenue stream of the 

ERS” and one of “indefinite duration.” Brief for Respondent-Appellee Employees Retirement 

System of the Government of the Commonwealth of Puerto Rico at 30, No. 16-2433 (1st Cir. Dec. 

23, 2016); see also id. at 14 (adopting the district court’s finding that the lien “continues 

indefinitely until ERS’s outstanding debt obligations have been satisfied in full”). The 

Commonwealth, too, described Movants’ lien as one on “constantly replenished revenues.” Brief 

for Respondents-Appellees Alejandro Garcia-Padilla, Juan C. Zaragoza-Gomez, Luis G. CruzBatista, and Carmen Villar-Prados at 45, No. 16-2433 (1st Cir. Dec. 23, 2016); see also id. 

(adopting the district court’s finding that the lien is on a “recurring source[] of income”). And the 

Oversight Board described the lien as a “perpetual, replenishing revenue stream[].” Brief of 

Amicus Curiae Financial Oversight and Management Board for Puerto Rico in Support of 

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Respondents-Appellees Urging Affirmance of the District Court Order at 7, No. 16-2433 (1st Cir. 

Dec. 23, 2016).5

 

III. Movants’ Property Interests Are Not Adequately Protected.

24. Under § 361 of the Bankruptcy Code, a debtor may provide adequate protection in 

one of three ways when the automatic stay results in a decrease in the value of a secured creditor’s 

interest in property: (1) by making cash payments or periodic cash payments in an amount equal 

to the decrease in the value of the secured creditor’s interest in property, (2) by providing an 

additional or replacement lien to replace the property, or (3) by providing other relief “as will result 

in the realization by [the secured creditor] of the indubitable equivalent of such entity’s interest in 

such property.” 11 U.S.C. § 361(1)–(3); see 48 U.S.C. § 2161(a) (incorporating 11 U.S.C. § 361 

into PROMESA); see also In re Bldrs. Grp. & Dev. Corp., 502 B.R. 95, 122 (Bankr. D.P.R. 2013) 

(any decrease in collateral value “attributable to the debtor’s usage” of rents pledged as collateral 

“must be protected by cash payments from another source, an additional or replacement lien, or 

other such indubitable equivalent”). 

25. It is clear that Movants are entitled to adequate protection. Since ERS’s Title III 

filing, ERS and the Commonwealth have taken actions that have resulted in a decrease in value of 

Movants’ collateral.

26. The fact that ERS disputes the validity and scope of Movants’ liens does not 

absolve ERS of its obligation to provide Movants with adequate protection until those disputes are 

resolved. “Questions of the validity of liens are not generally at issue in a 362 hearing, but only 

whether there is a colorable claim of a lien on property of the estate.” Matter of Vitreous Steel 

Products Co., 911 F.2d 1223, 1234 (7th Cir. 1990) (emphasis in original); see also Grella v. Salem 

 5 This Motion is not an attempt to relitigate issues regarding the validity and scope of 

Movants’ liens that are pending in the Adversary Proceeding.

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Five Cent Sav. Bank, 42 F.3d 26, 32 (1st Cir. 1994) (same, collecting cases). Thus, courts generally 

grant relief from the automatic stay due to the lack of adequate protection notwithstanding 

challenges by the debtor to the creditor’s underlying claim. See, e.g., In re Bailey, 574 B.R. 15, 

19 (Bankr. D. Me. 2017) (“[r]elief from stay hearings are merely summary proceedings to ascertain 

whether the party seeking relief has a colorable claim to estate property” rather than determinations 

of “the merits of underlying substantive claims, defenses, or counterclaims”); In re Buehne Farms, 

Inc., No. 04-32052, 2005 WL 2456867, at *2 (Bankr. S.D. Ill. Apr. 26, 2005) (creditors entitled to 

monthly adequate protection payments while the court resolved debtors’ challenges to the validity 

and priority of creditors’ liens on debtors’ property). As this Court is aware, ERS commenced the 

Adversary Proceeding to challenge the validity, priority, and extent of Movants’ liens and security 

interests under the ERS Bonds. To that end, each party submitted three briefs on the cross-motions 

for summary judgment, as well as two additional briefs in response to this Court’s request for 

supplemental briefing. In light of that procedural history, there can be no serious dispute that 

Movants have at least a “colorable” claim of a lien on property of ERS.

27. Because Movants’ property interests are not adequately protected, Movants are 

entitled to relief from the automatic stays triggered by ERS’s and the Commonwealth’s Title III 

filings. See 11 U.S.C. § 362(d)(1) (“the court shall grant relief from the stay . . . for cause, 

including the lack of adequate protection”).

IV. Movants Request A Prompt Hearing On The Motion To Lift The Automatic Stay.

28. Section 362(d)(1) of the Bankruptcy Code states that, “[o]n request of a party in 

interest and after notice and a hearing, the court shall grant relief from the stay . . . such as by 

terminating, annulling, modifying, or conditioning such stay . . . for cause, including the lack of 

adequate protection of an interest in property of such party in interest.” 11 U.S.C. § 362(d)(1) 

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(emphasis added). Movants respectfully request a prompt hearing on the instant motion to lift the 

automatic stay.

CONCLUSION

Based on the above and foregoing, Movants respectfully request that the Court enter an 

order granting Movants relief from the automatic stay, and any further relief as the Court may 

deem proper.

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In San Juan, Puerto Rico, today July 3, 2018.

By:

/s/ AlfredoFernández-Martínez ___ /s/ Bruce Bennett_____________ 

Alfredo Fernández-Martínez

DELGADO & FERNÁNDEZ, LLC

PO Box 11750

Fernández Juncos Station

San Juan, Puerto Rico 00910-1750

Tel. (787) 274-1414

Fax: (787) 764-8241

afernandez@delgadofernandez.com

USDC-PR 210511

Counsel for ERS Bondholders Altair Global

Credit Opportunities Fund (A), LLC,

Andalusian Global Designated Activity

Company, Glendon Opportunities Fund,

L.P., Mason Capital Master Fund L.P.,

LLC, Nokota Capital Master Fund, L.P.,

Oaktree-Forrest Multi- Strategy, LLC

(Series B), Oaktree Opportunities Fund IX,

L.P., Oaktree Opportunities Fund IX

(Parallel 2), L.P., Oaktree Value

Opportunities Fund, L.P., Ocher Rose,

L.L.C., and SV Credit, L.P.

Bruce Bennett (pro hac vice)

JONES DAY

555 South Flower Street

Fiftieth Floor

Los Angeles, California 90071

Tel. (213) 489-3939

Fax: (213) 243-2539

bbennett@jonesday.com

Benjamin Rosenblum (pro hac vice)

James M. Gross (pro hac vice)

JONES DAY

250 Vesey Street

New York, NY 10281

Tel. (212) 326-3939

Fax: (212) 755-7306

brosenblum@jonesday.com

jgross@jonesday.com

Geoffrey S. Stewart (pro hac vice)

Beth Heifetz (pro hac vice)

Christopher J. DiPompeo (pro hac vice)

Sparkle L. Sooknanan (pro hac vice)

JONES DAY

51 Louisiana Ave. N.W.

Washington, DC 20001

Tel. (202) 879-3939

Fax: (202) 626-1700

gstewart@jonesday.com

bheifetz@jonesday.com

cdipompeo@jonesday.com

ssooknanan@jonesday.com

Counsel for ERS Bondholders Altair Global

Credit Opportunities Fund (A), LLC,

Andalusian Global Designated Activity

Company, Glendon Opportunities Fund, L.P.,

Mason Capital Master Fund L.P., LLC,

Nokota Capital Master Fund, L.P., OaktreeForrest Multi- Strategy, LLC (Series B),

Oaktree Opportunities Fund IX, L.P., Oaktree

Opportunities Fund IX (Parallel 2), L.P.,

Oaktree Value Opportunities Fund, L.P.,

Ocher Rose, L.L.C., and SV Credit, L.P.

Case:17-03283-LTS Doc#:3418 Filed:07/03/18 Entered:07/03/18 15:18:29 Desc: Main

Document Page 16 of 17
14

/s/ Alicia I. Lavergne-Ramírez /s/ John K. Cunningham

José C. Sánchez-Castro

USDC-PR 213312

jsanchez@sanpir.com

Alicia I. Lavergne-Ramírez

USDC-PR 215112

alavergne@sanpir.com

Maraliz Vázquez-Marrero

USDC-PR 225504

mvazquez@sanpir.com

SÁNCHEZ PIRILLO LLC

270 Muñoz Rivera Avenue, Suite 1110

San Juan, PR 00918

Tel. (787) 522-6776

Fax: (787) 522-6777

Counsel for Puerto Rico AAA Portfolio

Bond Fund, Inc., Puerto Rico AAA

Portfolio Bond Fund II, Inc., Puerto Rico

AAA Portfolio Target Maturity Fund, Inc.,

Puerto Rico Fixed Income Fund, Inc.,

Puerto Rico Fixed Income Fund II, Inc.,

Puerto Rico Fixed Income Fund III, Inc.,

Puerto Rico Fixed Income Fund IV, Inc.,

Puerto Rico Fixed Income Fund V, Inc.,

Puerto Rico GNMA & U.S. Government

Target Maturity Fund, Inc., Puerto Rico

Investors Bond Fund I, Puerto Rico

Investors Tax-Free Fund, Inc., Puerto

Rico Investors Tax-Free Fund, Inc. II,

Puerto Rico Investors Tax-Free Fund III,

Inc., Puerto Rico Investors Tax-Free Fund

IV, Inc., Puerto Rico Investors Tax-Free

Fund V, Inc., Puerto Rico Investors TaxFree Fund VI, Inc., Puerto Rico

Mortgage-Backed & U.S. Government

Securities Fund, Inc., Tax-Free Puerto

Rico Fund, Inc., Tax-Free Puerto Rico

Fund II, Inc., and Tax-Free Puerto Rico

Target Maturity Fund, Inc.

John K. Cunningham (pro hac vice)

Glenn M. Kurtz (pro hac vice)

WHITE & CASE LLP

1221 Avenue of the Americas

New York, NY 10036

Tel. (212) 819-8200

Fax (212) 354-8113

jcunningham@whitecase.com

gkurtz@whitecase.com

Jason N. Zakia (pro hac vice)

Cheryl T. Sloane (pro hac vice)

WHITE & CASE LLP

200 S. Biscayne Blvd., Suite 4900

Miami, FL 33131

Tel. (305) 371-2700

Fax (305) 358-5744

jzakia@whitecase.com

csloane@whitecase.com

Counsel for Puerto Rico AAA Portfolio

Bond Fund, Inc., Puerto Rico AAA

Portfolio Bond Fund II, Inc., Puerto Rico

AAA Portfolio Target Maturity Fund, Inc.,

Puerto Rico Fixed Income Fund, Inc.,

Puerto Rico Fixed Income Fund II, Inc.,

Puerto Rico Fixed Income Fund III, Inc.,

Puerto Rico Fixed Income Fund IV, Inc.,

Puerto Rico Fixed Income Fund V, Inc.,

Puerto Rico GNMA & U.S. Government

Target Maturity Fund, Inc., Puerto Rico

Investors Bond Fund I, Puerto Rico

Investors Tax-Free Fund, Inc., Puerto

Rico Investors Tax-Free Fund, Inc. II,

Puerto Rico Investors Tax-Free Fund III,

Inc., Puerto Rico Investors Tax-Free Fund

IV, Inc., Puerto Rico Investors Tax-Free

Fund V, Inc., Puerto Rico Investors TaxFree Fund VI, Inc., Puerto Rico

Mortgage-Backed & U.S. Government

Securities Fund, Inc., Tax-Free Puerto

Rico Fund, Inc., Tax-Free Puerto Rico

Fund II, Inc., and Tax-Free Puerto Rico

Target Maturity Fund, Inc.

Case:17-03283-LTS Doc#:3418 Filed:07/03/18 Entered:07/03/18 15:18:29 Desc: Main

Document Page 17 of 17