UNITED STATES DISTRICT COURT 

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 

No. 17 BK 3283-LTS 

(Jointly Administered) 

IN RE: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO 

RICO, 

as representative of 

EMPLOYEES RETIREMENT SYSTEM OF 

THE GOVERNMENT OF THE 

COMMONWEALTH OF PUERTO RICO 

(“ERS”), 

 Debtor. 

PROMESA 

Title III 

No. 17 BK 3566-LTS 

(Jointly Administered) 

 

1

 The Debtors in 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 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 (Bankruptcy Case No. 17 BK 3284-LTS) (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 Power Authority (Bankruptcy Case No. 

17 BK 4780-LTS) (Last Four Digits of Federal Tax ID: 3747). 

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LIMITED RESPONSE AND JOINDER OF THE BANK OF NEW YORK 

MELLON, AS FISCAL AGENT, TO 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 

The Bank of New York Mellon (the “Fiscal Agent”), as fiscal agent for the 

pension funding bonds issued by the Employees Retirement System of the Government of the 

Commonwealth of Puerto Rico (“ERS”), through its undersigned counsel, hereby responds to 

and joins in 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 [No. 17 BK 

3566-LTS, ECF No. 289] (the “Motion”), pursuant to which the movants seek relief from the 

automatic stay and, in support hereof, respectfully represents as follows:2

BACKGROUND

A. ERS, the Fiscal Agent, and the Resolution 

1. As more fully set forth in the Motion, ERS is a trust established 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, and officers and 

employees of public corporations and municipalities of the Commonwealth. Motion ¶ 7. ERS is 

funded by employer contributions and is authorized to incur debt and to secure such debt with its 

assets. Id. ¶¶ 8-9. 

2. On January 24, 2008, ERS adopted the Resolution, pursuant to which ERS 

issued three series of pension funding Bonds in the aggregate original principal amount of 

approximately $2.9 billion. The Fiscal Agent serves as fiscal agent under the Resolution. See

Resolution § 801. 

 

2

 Capitalized terms used but not defined herein have the meanings given in the Pension Funding Bond 

Resolution (as supplemented, the “Resolution”) adopted by ERS on January 24, 2008. 

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3. The Resolution requires ERS to “punctually pay or cause to be paid the 

principal of and premium, if any, on every Bond” and “to promptly collect and remit the 

Employers’ Contributions to the Fiscal Agent.” Resolution § 701; see id. §§ 704, 709 (requiring 

ERS to perform all acts required under the provisions of the Act and the Resolution). 

4. In accordance with the Resolution, ERS granted the Fiscal Agent, for the 

benefit of itself and all Bondowners, a security interest in and lien on the Pledged Property, 

including all employer contributions received by ERS, all right, title, and interest of ERS in and 

to those contributions, and all rights to receive those contributions. Resolution § 501; id. Ex. B 

(defining “Pledged Property”). The Pledged Property is free and clear of any other pledge, lien, 

charge, or encumbrance, id. § 705, and the assignment and grant of the security interest is “valid 

and binding as against all parties having claims of any kind in tort, contract or otherwise against 

[ERS], irrespective of whether such parties have notice thereof.” Id. § 501. 

B. ERS Title III Case 

5. On May 21, 2017, The Financial Oversight and Management Board for 

Puerto Rico filed a petition for relief on behalf of ERS under title III of the Puerto Rico 

Oversight, Management, and Economic Stability Act, 48 U.S.C. § 2101 et seq.

6. On May 31, 2017, certain holders of beneficial interests in the Bonds filed 

the 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 (the “2017 Motion”) [No. 17 BK 3566-LTS, ECF No. 26], seeking adequate 

protection or relief from the automatic stay. 

7. On June 19, 2017, the Fiscal Agent joined in the 2017 Motion, requesting 

that any relief be granted to the Fiscal Agent, as the lienholder for the benefit of itself, the 

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movants, and all other Bondowners and Beneficiaries under the Resolution.[No. 17 BK 3566-

LTS, ECF No. 89]. 

8. As more fully described in the Motion, the 2017 Motion was resolved 

pursuant to a joint stipulation among ERS and the movants [No. 17 BK 3566-LTS, ECF No. 

171] that contemplated, among other things, continuing payments equal to the contractual 

amount of interest due and payable on the Bonds to all Bondowners. 

9. On July 3, 2018, certain holders of beneficial interests in the Bonds filed 

the current Motion seeking relief from the automatic stay under section 362(d)(1) of the 

Bankruptcy Code. 

LIMITED RESPONSE AND JOINDER 

10. The Fiscal Agent joins in the Motion for the reasons set forth therein. To 

the extent that the Court grants the Motion, the relief should be granted to the Fiscal Agent, as 

the holder of liens and security interests, for the benefit of itself, the movants, and all other 

Bondowners and Beneficiaries, and not solely for the movants. 

WHEREFORE, the Fiscal Agent respectfully requests that the Court enter an 

order granting the Fiscal Agent, for the benefit of itself, all Bondowners, and other Beneficiaries, 

relief from the automatic stays imposed in ERS’s and the Commonwealth’s title III proceedings 

to exercise any and all rights and remedies that may be available to the Fiscal Agent under the 

Resolution or otherwise at law or in equity, including enforcement of its liens and security 

interests. 

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Dated: July 10, 2018 Respectfully submitted, 

 San Juan, Puerto Rico 

SEPULVADO, MALDONADO & COURET 

By: /s/ Albéniz Couret-Fuentes 

Elaine Maldonado-Matías 

USDC-PR Bar No. 217309 

Albéniz Couret-Fuentes 

USDC-PR Bar No. 222207 

José Javier Santos Mimoso 

USDC-PR Bar No. 208207 

304 Ponce de León Ave. – Suite 990 

San Juan, PR 00918 

Telephone: (787) 765-5656 

Facsimile: (787) 294-0073 

Email: emaldonado@smclawpr.com 

Email: acouret@smclawpr.com 

Email: jsantos@smclawpr.com 

REED SMITH LLP 

/s/ Eric A. Schaffer 

Eric A. Schaffer 

Luke A. Sizemore 

225 Fifth Avenue, Suite 1200 

Pittsburgh, PA 15222 

Telephone: (412) 288-3131 

Facsimile: (412) 288-3063 

Email: eschaffer@reedsmith.com 

Email: lsizemore@reedsmith.com 

Kurt F. Gwynne 

1201 N. Market Street, Suite 1500 

Wilmington, DE 19801 

Telephone: (302) 778-7550 

Facsimile: (302) 778-7575 

Email: kgwynne@reedsmith.com 

Counsel to The Bank of New York Mellon, 

as fiscal agent

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