Hearing Date: June 6, 2018 at 9:30 a.m. (AST)

IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

IN RE: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO, 

 as representative of 

THE COMMONWEALTH OF PUERTO 

RICO, et al.,

 Debtors.1

PROMESA 

Title III 

Case No. 17-bk-03283 (LTS) 

(Jointly Administered) 

RESPONSE TO RENEWED MOTION OF CREDITORS’ COMMITTEE SEEKING 

ENTRY OF ORDER, UNDER BANKRUPTCY RULE 2004, AUTHORIZING 

DISCOVERY PROGRAM WITH RESPECT TO CERTAIN CAUSES OF 

PUERTO RICO FINANCIAL CRISIS BEGINNING ON AUGUST 15, 2018 

To the Honorable United States Magistrate Judge Judith G. Dein: 

The Official Committee of Retired Employees of the Commonwealth of Puerto Rico (the 

“Retiree Committee”) respectfully submits its response to the Renewed Motion of Creditors’ 

Committee (“Movant” or “UCC”) Seeking Entry of Order, Under Bankruptcy Rule 2004, 

Authorizing Discovery Program With Respect To Certain Causes Of Puerto Rico Financial Crisis 

Beginning On August 15, 2018 [Dkt. No. 3066] (the “Motion”). 

 

1

 The Debtors in these jointly-administered PROMESA title III cases (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: (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 (Bankruptcy Case No. 17 BK 3284) (Last Four Digits of Federal Tax ID: 8474); (iii) Puerto 

Rico Highways and Transportation Authority (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 

(Bankruptcy Case No. 17 BK 3566-LTS) (Last Four Digits of Federal Tax ID: 9686); and (v) Puerto Rico Electric and 

Power Authority (Bankruptcy Case No. 17 BK 4780) (Last Four Digits of Federal Tax ID: 3747). 

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INTRODUCTION 

1. In its Motion, the UCC raises two primary objections to the ongoing investigation 

by Kobre & Kim (the “Investigator”). First, the UCC complains of the pace of the investigation 

and the UCC’s anticipated content of the Investigator’s report, and asks this Court to permit the 

UCC, no later than August 15, 2018, to conduct its own Rule 2004 exams of certain targets of the 

investigation. (Motion ¶ 12.) Second, the UCC complains of the lack of cooperation from the 

Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”), and in particular, 

AAFAF’s refusal to consent to a nondisclosure agreement that would permit the Investigator to 

share certain documents produced by AAFAF with the UCC. (Motion ¶ 19.) As set forth below, 

as to the first issue, the Retiree Committee’s position is that the UCC’s request to conduct its own 

investigation is premature and should be continued to the September 12, 2018 omnibus hearing 

date, at which time the parties and the Court will have a true sense of where the investigation 

stands. As to the second issue, the Retiree Committee concurs with the UCC’s complaints and 

submits that the most efficient way to resolve the issue is to order AAFAF to produce (or permit 

the Investigator to produce) all documents subject to the existing nondisclosure agreements. 

RESPONSE 

A. The UCC’s Request For 2004 Discovery Should Be Continued To The September 12, 

2018 Hearing. 

2. The Motion’s request that the UCC be permitted to commence full-fledged 

discovery on or before August 15, 2018 is premature. In the Motion, the UCC complains of the 

speed of the investigation and the content of the Investigator’s yet-to-be-released report. Although 

the UCC correctly notes that the Investigator has extended the timeline in which it anticipates 

completing the report, the same reasons that led this Court to deny the UCC’s first motion still 

persist. (See November 15, 2017 Hearing Transcript at pp. 72-73.) As the Court explained then, 

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the motion was (and the present Motion is) “premature” because “the independent investigator 

should be given the opportunity to conduct this investigation.” (Id.) 

3. Based upon the Retiree Committee’s weekly calls with the Investigator, the Retiree 

Committee is informed that: (i) the Investigator will issue its report by August 15, 2018; (ii) that 

prior to the release of the report, the Investigator will seek approval of an “exit plan,” that will, in 

part, provide both Committees with access to all documents that were turned over to the 

Investigator and not subject to a claim of attorney-client privilege; and (iii) that the report will 

directly identify potentially viable cause of actions against third parties. Thus, while the Retiree 

Committee did not understand the Court’s comments at the November 15 hearing to give the 

Investigator an open-ended deadline in which to complete its report, it believes that the 

Investigator’s expectation of delivering a final investigation report during the summer of 2018 is 

reasonable. 

4. Deferring the Motion’s request for a parallel investigation until after the 

Investigator releases the final report may eliminate completely, or at least curtail, the UCC’s stated 

need for 2004 discovery. At a minimum, it will certainly allow the Committees to narrowly tailor 

any future discovery requests. For this reason, the UCC’s request that it be permitted to conduct 

its own investigation is premature and should be continued to the September 12, 2018 hearing, at 

which time the parties will have seen the Investigator’s final report and will be in a position to 

provide the Court with a status report as to what additional discovery, if any, is necessary. 

5. In the event, however, the Court decides to grant the Motion now, the Retiree 

Committee requests that it be given equal authority to pursue Rule 2004 discovery as the UCC 

with an understanding the two Committees will coordinate their discovery efforts. The 

Commonwealth owes the Retiree Committee’s constituents approximately $50 billion in pension 

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obligations, making the government retirees the largest creditor group in these cases. As such, the 

Retiree Committee should be allowed to participate in any discovery authorized by this Court. 

B. The Court Should Order AAFAF To Provide The Committees Access To Documents 

Produced To The Investigator. 

6. With regard to documents produced to the Investigator by AAFAF, the Retiree 

Committee shares the UCC’s frustration. Like the UCC, the Retiree Committee and the 

Investigator have entered into a nondisclosure agreement that governs how and when the 

Investigator will share documents it receives from third parties with the Retiree Committee, and 

separately has entered into a nondisclosure agreement with AAFAF. Perhaps more than any other 

party, AAFAF possesses documents that will be critical to the Investigator’s efforts as well as to 

the efforts of both Committees. Yet, despite the existence of these nondisclosure agreements, 

AAFAF has refused to let the Committees see any document from AAFAF unless a further 

nondisclosure agreement is entered into with them. Also like the UCC, the Retiree Committee 

through its counsel has tried for several months to get AAFAF’s consent to such an agreement, but 

to no avail. It appears that AAFAF is engaged in a pattern of delay to avoid ever having to produce 

the documents produced to the Investigator to the Committees. 

7. This obstruction impairs the ability of the Committees to rely upon the Investigator 

and its final report and should be addressed now. The Retiree Committee believes the most 

efficient approach would be for this Court to order AAFAF to give the Committees access to the 

documents AAFAF has allowed the Investigator to see subject to the nondisclosure agreements 

the Committees have entered into with the Investigator and AAFAF. Such an order would help 

ensure that both official Committees have access to the documents they need without having to 

undergo the expensive, time-consuming and duplicative efforts of a Rule 2004 subpoena. 

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 Dated: May 22, 2018 Respectfully submitted, 

JENNER & BLOCK LLP 

By: 

/s/ Robert Gordon 

Robert Gordon (admitted pro hac vice) 

Richard Levin (admitted pro hac vice) 

919 Third Ave 

New York, NY 10022-3908 

rgordon@jenner.com

rlevin@jenner.com

212-891-1600 (telephone) 

212-891-1699 (facsimile) 

Catherine Steege (admitted pro hac vice) 

Melissa Root (admitted pro hac vice) 

353 N. Clark Street 

Chicago, IL 60654 

csteege@jenner.com

mroot@jenner.com 

312-222-9350 (telephone) 

312-239-5199 (facsimile) 

BENNAZAR, GARCÍA & MILIÁN, C.S.P. 

By: 

/s/ A.J. Bennazar-Zequeira 

A.J. Bennazar-Zequeira 

Edificio Union Plaza 

PH-A piso 18 

Avenida Ponce de León #416 

Hato Rey, San Juan 

Puerto Rico 00918 

ajb@bennazar.org

787-754-9191 (telephone) 

787-764-3101 (facsimile) 

Counsel for The Official Committee of Retired 

Employees of Puerto Rico

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