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

No. 17 BK 3283-LTS

(Jointly Administered)

ORDER APPROVING

PROCEDURE TO RESOLVE COMMONWEALTH-COFINA DISPUTE

Upon the Motion of Debtors for Order Approving Procedure to Resolve

Commonwealth-COFINA Dispute (the “Motion”);2 and the Court having found it has subject

matter jurisdiction over this matter pursuant to PROMESA section 306(a); and it appearing

that venue is proper pursuant to PROMESA section 307(a); and the Court having found that

the relief requested in the Motion is in the best interests of the Debtors, their creditors, and

other parties in interest; and the Court having found that the Debtors provided adequate and

appropriate notice of the Motion under the circumstances and that no other and further notice

is required; and the Court having reviewed the Motion and having heard statements in support

of the Motion at a hearing held before the Court (the “Hearing”); and the Court having

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

1

 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 (the “Commonwealth”) (Bankruptcy Case No. 17 BK 3283-LTS) (Last

Four Digits of Federal Tax ID: 3481); and (ii) Puerto Rico Sales Tax Financing Corporation

(“COFINA” and, together with the Commonwealth, the “Debtors”) (Bankruptcy Case No. 17 BK

3284-LTS) (Last Four Digits of Federal Tax ID: 8474).

2

 Capitalized terms used but not otherwise defined herein shall have the meanings given to them in the

Motion.

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determined that the legal and factual bases set forth in the Motion and at the Hearing establish

just cause for the relief granted herein; and any objections to the relief requested herein having

been withdrawn or are overruled on the merits; and after due deliberation and sufficient cause

appearing therefor, it is HEREBY ORDERED THAT:

1. The Motion is granted as set forth herein.

2. The Oversight Board may implement the following actions and procedures

relating to the Commonwealth-COFINA Dispute:

a. The Oversight Board, as representative of title III debtor Commonwealth of

Puerto Rico pursuant to PROMESA section 315(b), shall appoint an

independent agent to serve as the Commonwealth representative to litigate

and/or settle the Commonwealth-COFINA Dispute on behalf of the

Commonwealth (the “Commonwealth Agent”).

b. The Oversight Board shall select the Commonwealth Agent from among the

general statutory creditors’ committee that may be appointed in the

Commonwealth’s title III case and at least two nominations made by the

creditors of the Commonwealth listed on Exhibit B of the Motion.

c. The Oversight Board, as representative of title III debtor COFINA pursuant to

PROMESA section 315(b), shall appoint anAn independent agent shall be

appointed to serve as the COFINA representative to litigate and/or settle the

Commonwealth-COFINA Dispute on behalf of COFINA (the “COFINA

Agent”).

d. The Oversight Board shall select the COFINA Agent from among the statutory

creditors’ committee that may be appointed in COFINA’s title III case and at

least two nominations made by the creditors and other interested stakeholders of

COFINA listed on Exhibit C of the Motion.COFINA Agent must be an

individual upon whom the COFINA Senior Bondholders’ Coalition, Ambac

Assurance Corporation, and National Public Finance Guarantee Corporation

(together, the “COFINA Senior Representatives”) unanimously agree. The

COFINA Senior Representatives will submit the nominee to serve as the

COFINA Agent within 10 days of entry of this Order, who shall be appointed as

the COFINA Agent.

e. If the creditors on Exhibit B and/or Exhibit C of the Motion fail to agree on

two nominations, Oversight Board members Arthur J. Gonzalez and David A.

Skeel shall select the Agent(s)Commonwealth Agent after consulting with

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creditors of the Commonwealth and considering potential persons that had and

had not been nominated.

f. Each Agent shall be entitled to retain legal and other professionals it reasonably

deems appropriate.

i. Each Agent and each of its retained advisors shall be compensated by

the Debtor on whose behalf they are acting, in conformity with

PROMESA section 316 and any interim compensation procedures

ordered by the Court.

g. The Agents shall cooperate to commence the +In advance of the

commencement of any litigation to resolve the Commonwealth-COFINA

Dispute by no later than ten (10) days after the Agents are appointed. -In

advance of the commencement of such litigation, the Agents, the Oversight

Board, and AAFAF shall agree to a schedule constructed to enable the

Courtappropriate court to rule, on a final basis, on the Commonwealth-COFINA

Dispute, on or before November 1, 2017, in the absence of a prior settlement.

This Order does not impair or release any rights of the government or the

Oversight Board under PROMESA or otherwise, including PROMESA section

305.

h. Each of the COFINA Senior Representatives shall be authorized to intervene in

any litigation commenced to resolve the Commonwealth-COFINA Dispute

without any further order of the Court.

i. The COFINA Agent shall owe fiduciary duties to COFINA, and not to any

individual creditor or creditor group.

j. h. Each Agent shall endeavor to the best of the Agent’s ability under the

circumstances to litigate and negotiate from the perspective of what result is

best for the Debtor the Agent represents based on the Agent’s estimation of the

probabilities of the potential outcomes, as opposed to what result is best for any

particular type of creditor of the Debtor the Agent represents, consistent with

the approach explained by Chancellor Allen of the Delaware Chancery Court in

Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications Corp., 1991

Del. Ch. LEXIS 215*108 n. 55 (Del. Ch. 1991), and espoused in Protective

Committee for Independent Shareholders of TMT Trailer Ferry, Inc. v.

Anderson, 390 U.S. 414, 424-425 (1968).

k. i. To the extent it is necessary or desirable to link a settlement to the treatment

of creditors’ claims in a title III plan of adjustment, the Oversight Board may

participate in the negotiations in an effort to reach such a settlement. For the

avoidance of doubt, except upon further order of the Court, no Agent shall have

the authority to litigate or settle any matter other than the CommonwealthCOFINA Dispute.

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l. j. Any settlement negotiated by the Agents shall only be effective upon (i)

consent of the Oversight Board, (ii) an order of the Court granting an Oversight

Boarda motion requesting approval of such settlement, or (iiiii) confirmation of a

title III plan of adjustment incorporating such settlement.

m. k. Notwithstanding the appointment of Agents, the Oversight Board shall remain

the only party authorized by PROMESA to propose a title III plan of

adjustment, and to carry out that power and duty, the Oversight Board may, at

any time, propose a title III plan of adjustment for the Commonwealth and/or

COFINA that incorporates a settlement of the Commonwealth-COFINA

Dispute, developed by the Agents, or developed by the Oversight Board, and

the Oversight Board may negotiate with creditors to achieve such settlement of

the Commonwealth-COFINA Dispute.

3. The mediation that began prior to the commencement of the above captioned

title III cases among the COFINA senior bondholders, COFINA subordinate bondholders,

monoline insurers, general obligation bondholders, and the Oversight Board, among others,

shall resume promptly. The mediator shall be selected from among the members of the Courtappointed Mediation Team.

4. 3. Nothing herein shall deprive AAFAF and the government of any standing and

other rights to appear that they have in any litigation relating to the Commonwealth-COFINA

Dispute or any other litigations.

5. 4. The Debtor and the Oversight Board, as the Debtors’ representative, are

authorized to take all actions, and to execute all documents, necessary or appropriate, to

effectuate the relief granted in this order in accordance with the Motion.

6. 5. The Court retains exclusive jurisdiction with respect to all matters arising

from or related to the implementation, interpretation, and enforcement of this order.

Dated: ___________, 2017 ______________________________

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San Juan, Puerto Rico Honorable Laura Taylor

Swain

United States District Judge

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