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.

Debtor. 

____________________________________________ 

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) 

 

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OBJECTION OF THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR 

PUERTO RICO TO THE URGENT MOTION TO SET SUPPLEMENTAL BRIEFING 

AND DISCOVERY SCHEDULE WITH RESPECT TO MOTION OF CERTAIN 

SECURED CLAIMHOLDERS OF THE EMPLOYEES RETIREMENT SYSTEM OF 

THE GOVERNMENT OF THE COMMONWEALTH OF PUERTO RICO 

FOR RELIEF FROM THE AUTOMATIC STAY 

 

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To the Honorable United States District Court Judge Laura Taylor Swain: 

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

as representative of the Commonwealth of Puerto Rico (the “Commonwealth”) and the Employees 

Retirement System of the Government of the Commonwealth of Puerto Rico (the “ERS” and, 

collectively with the Commonwealth, the “Debtors”) in these Title III cases pursuant to section 

315(b) of the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”), 

respectfully submits this objection to the urgent motion filed by the ERS Bondholders1 [Docket 

No. 3738 in Case No. 17-bk-3283 and Docket No. 308 in Case No. 17-bk-3566] (the “Urgent 

Motion”) for entry of an order setting a schedule concerning the 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 [Docket No. 3418 in Case No. 17-bk-03283 and Docket 

No. 289 in Case No. 17-bk-03566] (the “Adequate Protection Motion”). In support of its objection, 

the Oversight Board states as follows: 

 

1

 The full list of ERS Bondholders includes Altair Global Credit Opportunities Fund (A), LLC, 

Andalusian Global Designated Activity Company, Glendon Opportunities Fund, L.P., Mason 

Capital Management, 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., 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. 

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BACKGROUND 

1. On July 3, 2018, the ERS Bondholders filed the Adequate Protection Motion. See

Docket No. 3418 in Case No. 17-bk-03283 and Docket No. 289 in Case No. 17-bk-03566. 

2. On July 10, 2018, the Oversight Board filed its opposition on behalf of ERS to the 

Adequate Protection Motion [Docket No. 3465 in Case No. 17-bk-03283 and Docket No. 292 in 

Case No. 17-bk-03566]. 

3. Also on July 10, 2018, the Official Committee of Retired Employees of Puerto Rico 

(“Retiree Committee”) objected to the Adequate Protection Motion [Docket No. 3468 in Case No. 

17-bk-3283 and Docket No. 293 in Case No. 17-bk-3566]; the American Federation of State, 

County and Municipal Employees (“AFSCME”) joined the Oversight Board’s and the Retiree 

Committee’s objections [Docket No. 3469 in Case No. 17-bk-3283 and Docket No. 294 in Case 

No. 17-bk-3566]; and the Official Committee of Unsecured Creditors (“UCC”) also joined the 

Oversight Board’s and the Retiree Committee’s objections [Docket No. 3470 in Case No. 17-bk3283 and Docket No. 296 in Case No. 17-bk-3566]. 

4. On July 17, 2018, the ERS Bondholders filed a reply in support of the Adequate 

Protection Motion [Docket No. 3592 in Case No. 17-bk-03283 and Docket No. 303 in Case No. 

17-bk-03566]. 

5. On July 20, 2018, the Court entered an order scheduling a preliminary hearing on 

the Adequate Protection Motion pursuant to Bankruptcy Code § 362(e)(1) at the Omnibus Hearing 

on July 25, 2018 [Docket No. 3654 in Case No. 17-bk-03283]. 

6. During the preliminary hearing on July 25, 2018, the Court stated, “[T]he lack of a 

showing relative to diminution of the value of collateral by reason of the automatic stay leads the 

Court to conclude at this juncture that there is a reasonable likelihood that the party opposing relief 

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from the stay will prevail at the conclusion of the final hearing within the meaning of Section 

362(e)(1).” July 25, 2018 Hr’g Tr. 81:9-14. 

7. Importantly, also during the preliminary hearing on July 25, 2018, the Court noted 

the issues in the Adequate Protection Motion were “bound up” with the question of whether the 

ERS Bondholders have a security interest, and that the Court anticipated the parties would “know 

more about my thinking about those things before we come back for the final hearing” then 

scheduled for September 12, 2018. July 25, 2018 Hr’g Tr. 87:14-18. 

8. Also during the preliminary hearing on July 25, 2018, the Court remarked that it 

could set “a schedule for any further supplemental submissions and a response to the supplemental 

submission[s] in advance of the final hearing.” July 25, 2018 Hr’g Tr. 82:10-16. The Court asked 

the parties to confer on that schedule and to identify “whether there are disputed issues of fact that 

would have to be explored at an evidentiary hearing” in lieu of agreed-upon facts. Hr’g Tr. 88:24-

89:4. 

9. Also during the preliminary hearing on July 25, 2018, counsel to the ERS 

Bondholders stated the record “amply demonstrates” the basis for the Adequate Protection Motion, 

and that “the facts are, I think, extraordinarily well known.” July 25, 2018 Hr’g Tr. 81:25-82:1, 

83:13-15. In response to the Court’s remark that the ERS Bondholders may “clarify and 

supplement” the record, counsel to the ERS Bondholders responded they “actually might have the 

entire submission done” before proposing a schedule for supplemental submissions and responses. 

July 25, 2018 Hr’g Tr. 87:19-88:4. 

10. On August 3, 2018, counsel to the ERS Bondholders filed a 1,264-page 

supplemental submission (the “ERS Supplemental Submission”) in support of the Adequate 

Protection Motion prior to filing a proposed schedule. [Docket No. 3734 in Case No. 17-bk-3283 

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and Docket No. 307 in Case No. 17-bk-3566]. Also on August 3, 2018, the ERS Bondholders 

filed the Urgent Motion. 

ARGUMENT 

11. As a threshold matter, the Court should deny the Urgent Motion in its entirety 

because the Court indicated it intends to decide the pending summary-judgment motions 

concerning whether the ERS Bondholders have a security interest prior to the date of the next 

Omnibus Hearing. If the Court rules in favor of the Debtors, there will be no need for a final 

hearing on the Adequate Protection Motion (let alone additional discovery). If the Court rules in 

favor of the ERS Bondholders, the parties should meet and confer on an appropriate schedule to 

address any issues to be resolved, in light of that ruling, at a final hearing. 

12. If the Court does not deny the Urgent Motion in its entirety, the Court should deny 

the Urgent Motion except to set (a) a deadline for the Oversight Board to submit its own 

supplemental submissions in response to the ERS Supplemental Submission, (b) a schedule for the 

parties to submit agreed-upon or disputed facts for consideration at the final hearing, and (c) a final 

hearing date. The other relief sought by the ERS Bondholders should be denied for three reasons. 

13. First, the ERS Bondholders have already filed the supplemental material they 

contemplated filing at the preliminary hearing. The ERS Bondholders stated they may have their 

“entire [supplemental] submission” ready before proposing a schedule at the July 25 Omnibus 

Hearing, and in fact filed a 1,264-page supplement in support of the Adequate Motion on August 

3, 2018. [Docket No. 3734 in Case No. 17-bk-3283 and Docket No. 307 in Case No. 17-bk-3566]. 

As such, other than setting a date for the Oversight Board to file its own supplemental submissions 

(if any), a schedule for the parties to submit agreed-upon or disputed facts for consideration at the 

final hearing, and a final hearing date, no other scheduling dates are necessary or warranted. 

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14. Second, the Court should deny the ERS Bondholders’ new request for additional 

discovery. The ERS Bondholders did not request additional discovery at the preliminary hearing 

or indicate additional discovery was necessary prior to the final hearing, and the Court did not 

order that any additional discovery would be taken. Indeed, counsel to the ERS Bondholders stated 

the record was “ampl[e],” that the facts were “extraordinarily well known,” and that the ERS 

Bondholders may file their record supplement even before filing a proposed schedule—which the 

ERS Bondholders did on August 3, 2018. The ERS Bondholders have not identified what 

additional discovery they require following the 1,264-page supplement they filed on August 3, 

2018, particularly where the ERS Bondholders believe the facts have been “amply” developed and 

are “extraordinarily well known” on a motion the Court has already concluded there is a 

“reasonable likelihood that the party opposing relief [viz. the Oversight Board]” would prevail. 

Further, the ERS Bondholders also have not identified why additional discovery would be 

warranted at this time in view of the Court’s intention to decide the pending summary-judgment 

motions concerning whether the ERS Bondholders have a security interest before the next 

Omnibus Hearing scheduled for September 13, 2018. 

15. Third, the ERS Bondholders’ proposed schedule does not contemplate identifying 

agreed-upon facts or issues of disputed facts ahead of the final hearing, as the Court had requested. 

See Hr’g Tr. 88:24-89:4. 

16. As such, should the Court not deny the Urgent Motion in its entirety pending a 

decision on the summary-judgment motions in Case No. 17-ap-213, the Oversight Board requests 

entry of the following schedule in accordance with the proposed order filed herewith pertaining to 

the Adequate Protection Motion in which all parties in interest—including not only the ERS 

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Bondholders and the Oversight Board, but also the Retiree Committee, the UCC, and AFSCME—

may participate: 

a. August 13, 2018: Deadline for the Oversight Board to file a supplemental 

submission (if any) in response to the ERS Supplemental Submission. 

b. August 24, 2018: Deadline for the ERS Bondholders to submit proposed 

agreed-upon facts for consideration at the final hearing. 

c. August 31, 2018: Deadline for the Oversight Board to submit responses to 

the ERS Bondholders’ proposed agreed-upon facts. 

d. September 7, 2018: Deadline for the parties to identify for the Court any 

agreed-upon or disputed facts with respect to the Adequate Protection 

Motion for consideration at the final hearing. 

e. September 13, 2018 (or such other date as the Court deems necessary): 

Final Hearing with respect to the Adequate Protection Motion. 

Dated: August 3, 2018 

New York, NY

Respectfully submitted, 

 /s/ Martin J. Bienenstock 

Martin J. Bienenstock (pro hac vice) 

Brian S. Rosen (pro hac vice) 

Jeffrey W. Levitan (pro hac vice) 

Timothy W. Mungovan (pro hac vice) 

Steven O. Weise (pro hac vice) 

PROSKAUER ROSE LLP

Eleven Times Square 

New York, NY 10036 

Tel: (212) 969-3000 

Fax: (212) 969-2900 

Email: mbienenstock@proskauer.com 

Email: brosen@proskauer.com 

Email: jlevitan@proskauer.com 

Email: tmungovan@proskauer.com 

Email: sweise@proskauer.com 

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Attorneys for the Financial Oversight and 

Management Board for Puerto Rico, as 

representative of the Commonwealth of 

Puerto Rico and Employees Retirement 

System of the Government of the 

Commonwealth of Puerto Rico 

/s/ Luis F. del Valle-Emmanuelli 

Luis F. del Valle-Emmanuelli

USDC-PR No. 209514 

P.O. Box 79897 

Carolina, Puerto Rico 00984-9897 

Tel. 787.977.1932 

Fax. 787.722.1932 

dvelawoffices@gmail.com 

OF COUNSEL FOR 

A&S LEGAL STUDIO, PSC 

434 Avenida Hostos 

San Juan, PR 00918 

Tel: (787) 751-6764/ 763-0565 

Fax: (787) 763-8260 

Attorneys for the Financial Oversight and 

Management Board for Puerto Rico, as 

representative of the Commonwealth of 

Puerto Rico and Employees Retirement 

System of the Government of the 

Commonwealth of Puerto Rico

CERTIFICATE OF SERVICE 

I hereby certify that, on this same date, I electronically filed the foregoing with the Clerk 

of the Court using the CM/ECF system, which will send notifications of such filing to all CM/ECF 

participants in this case. 

/s/ Luis F. del Valle-Emmanuelli 

Luis F. del Valle-Emmanuelli 

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