IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐x 

In re:                  PROMESA  

                  Title III 

THE FINANCIAL OVERSIGHT AND  

MANAGEMENT BOARD FOR PUERTO RICO, 

  as representative of            No. 17 BK 3283‐LTS  

THE COMMONWEALTH OF PUERTO RICO, et al.,                 (Jointly Administered) 

      Debtors.1  

‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐x 

ORDER 

I. INTRODUCTION 

This matter is before the Court on Movants’2 request for the production of certain 

categories of documents pursuant to Federal Rule of Bankruptcy Procedure 2004 (“Rule 2004”).  

This order resolves outstanding issues from the Urgent Renewed Joint Motion by the Ad Hoc 

Group of General Obligation Bondholders, Ambac Assurance Corporation, Assured Guaranty 

 

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 (Bankruptcy Case No. 17 BK 3283‐LTS) (Last Four Digits of Federal Tax ID: 

3481); (ii) Puerto Rico Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17 BK 3284‐LTS) 

(Last Four Digits of Federal Tax ID: 8474); (iii) Puerto Rico Highways and Transportation Authority 

(“HTA”) (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 (“ERS”) (Bankruptcy Case 

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

Authority (“PREPA”) (Bankruptcy Case No. 17 BK 4780‐LTS) (Last Four Digits of Federal Tax ID: 3747) 

(Title III case numbers are listed as Bankruptcy Case numbers due to software limitations). 

   

2

 “Movants” are the Ad Hoc Group of General Obligation Bondholders, Ambac Assurance Corporation, 

Assured Guaranty Corp., Assured Guaranty Municipal Corp., the Mutual Fund Group, and National Public 

Finance Guarantee Corporation.  “Respondents” are the Federal Oversight and Management Board for 

Puerto Rico (the “Oversight Board”), the Commonwealth of Puerto Rico (the “Commonwealth”), and the 

Puerto Rico Fiscal Agency and Financial Advisory Authority (“AAFAF”).

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Corp., Assured Guaranty Municipal Corp., the Mutual Fund Group, and National Public Finance 

Guarantee Corporation for Order Authorizing Rule 2004 Examination (Dkt. No. 1870) (the 

“Renewed Motion”).  Since the filing of the Renewed Motion, the parties thereto have 

collaborated substantially and have narrowed the issues before the Court.   

The remaining disputes relate to materials that the parties call “Fiscal Plan Development 

Materials,” which they define as “information related to the prior and ongoing development of 

fiscal plans, including formula[e] and assumptions underlying those plans and communications 

between and among Respondents and Respondents’ respective officials, employees, consul‐

tants and representatives.”  See Joint Report, Dkt No. 2154 at I(b).  Specifically, they disagree as 

to the applicability of the deliberative process privilege to these Fiscal Plan Development 

Materials.  In addition, they disagree as to whether Fiscal Plan Development Materials should 

be deemed to be produced under Rule 2004 so that they can be used freely in litigation and 

otherwise.3

For the reasons detailed herein, this Court makes the following rulings.  First, pre‐

decisional communications and documents that relate to the development of the fiscal plans 

are privileged and may be withheld from production so long as a privilege log is maintained in 

accordance with the requirements set forth herein.  Second, as a general statement, the non‐

privileged Fiscal Plan Development Materials qualify as the types of materials that are 

discoverable under Rule 2004.  However, the Movants have not established good cause for 

their general release from confidentiality restrictions or their general use in this proceeding at 

 

3

 As detailed herein, most of the Fiscal Plan Development Materials have been produced in the data 

room.  While the materials, therefore, are available to the Movants, their use is restricted by various 

protective orders and non‐disclosure agreements.   

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this time.  Therefore, in accordance with the parties’ agreement with respect to the other 

materials in the data room, and as detailed more fully herein, Movants may attempt to use the 

Fiscal Plan Development Materials in the Title III or adversary proceedings, but the Respondents 

are not prejudiced from objecting to that use on a document by document basis.  See Joint 

Report at I(a).   

II. BACKGROUND 

On December 15, 2017, this Court granted the Renewed Motion by which Movants 

sought seventeen categories of discovery in this Title III proceeding.  See Order, Dkt. No. 2033.  

This Court granted the Renewed Motion “without waiver of any objections the Respondents 

may have to specific categories or documents.”  Id. at 2.  The parties subsequently filed the 

Joint Report with the Court identifying which discovery requests remained contested.  See Dkt. 

No. 2154.  They identified three such requests – 8, 16, and 17 – which collectively demand the 

production of what the parties refer to as “Fiscal Plan Development Materials,” as defined 

above.  See Joint Report, Dkt. No. 2154 at I(b).  The parties then submitted additional briefing 

further explaining the scope of their remaining disagreements.  Dkt. Nos. 2223, 2274, 2301.  

Despite the broad language of the specific requests, it is clear from the briefing that the focus 

of the requests for Fiscal Plan Development Materials are for information related to the March 

13, 2017 certified fiscal plan (the “2017 Plan”) and the 2018 fiscal plan currently in 

development (the “2018 Plan”).  It is also clear that as a result of the substantial collaboration 

of the parties, the only two issues remaining relate to the applicability of the deliberative 

process privilege and the Movants’ ability to use the Fiscal Plan Development Materials in these 

proceedings.   

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III. DISCUSSION 

A. Deliberative Materials 

Movants seek communications among the Commonwealth, AAFAF, the Oversight Board, 

and their professionals, as well as other materials relating to the creation of the 2017 and 2018 

Plans as part of the production of Fiscal Plan Development Materials.4  Respondents argue that 

these materials are protected by the deliberative process privilege.  The Court agrees, but 

orders Respondents to record any such objections in a categorical privilege log.   

The deliberative process privilege protects “the intra‐governmental exchange of thoughts 

that actively contribute to the agency’s decisionmaking process. . . .”  Texaco P.R., Inc. v. Dep’t 

of Consumer Affairs, 60 F.3d 867, 884‐85 (1st Cir. 1995).  It covers “documents reflecting 

advisory opinions, recommendations and deliberations comprising part of a process by which 

governmental decisions and policies are formulated.”  In re Pharm. Indus. Average Wholesale 

Price Litig., 254 F.R.D. 35, 39 (D. Mass. 2008) (quoting Dep’t of the Interior v. Klamath Water 

Users Protective Ass’n, 532 U.S. 1, 8, 121 S. Ct. 1060, 1062 149 L. Ed. 2d 87 (2001)).   

 

4

 Respondents argue that Movants have broadened their initial requests by asking for communications.  

Opposition, Dkt. No. 2274 at 4 (“[a]lthough Requests 8, 16, and 17 do not purport to seek communica‐

tions of any kind, Movants now demand all communications and documents exchanged between and 

among AAFAF, the Commonwealth and the Oversight Board related to the development of the existing 

Fiscal Plans and the development of the upcoming Fiscal Plans.”).  As the document requests in the 

Renewed Motion ask Respondents to “draw[] upon all materials in [y]our possession, custody, or control 

. . .” and further requires them to “provide all information in response to a Document Request[,]” 

Movants’ request for communications is reasonable.  See Renewed Motion, Schedule A, Dkt. No. 1870 

at 4‐5.  Furthermore, the parties jointly acknowledged that the Movants’ requests included 

communications when they defined Fiscal Plan Development Materials in the Joint Report as including 

communications.  Dkt. No. 2154 at I(b). 

  

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The final 2017 and 2018 Plans, as well as the “formula[e] and assumptions underlying those 

plans”5 are the final product of a governmental decision‐making process.  As such, those final 

materials are not privileged.  Texaco P.R., Inc., 60 F.3d at 884 (“to qualify for the privilege, a 

document must be (1) predecisional, that is, antecedent to the adoption of agency policy . . .”) 

(internal quotations and citations omitted).  It is this Court’s understanding that those post‐

decisional documents are currently being shared.  The internal communications leading up to 

those documents, however, as well as the drafts preceding the final plans, fall squarely within 

the deliberative process privilege.  Id. (protecting as privileged those documents that are 

“deliberative, that is, actually related to the process by which policies are formulated”) (internal 

quotation and citation omitted).  Those communications or documents which led to the 

creation of the final 2017 and 2018 Plans are subject to the deliberative process privilege and 

may be withheld from production. 

While the privileged documents may be appropriately withheld, they are responsive to 

the request for Fiscal Plan Development Materials and, as discussed infra, could otherwise 

qualify for production in this proceeding.  As such, Respondents must catalog their withholding 

in a privilege log.  The log shall be categorical, identifying the types of documents being 

withheld.  Respondents are not required to identify the number of individual documents 

withheld in each category.6  As otherwise agreed upon in the Joint Report, the privilege log shall 

 

5

 As included in the definition of Fiscal Plan Development Materials in the Joint Report.  Dkt. No. 2154 at 

I(b). 

6

 Despite Movants’ request that Respondents “be ordered to identify in their log the number of 

documents being withheld in each category[,]” Reply, Dkt. No. 2301 at 7, such information would be 

unduly burdensome and is not required under Fed. R. Civ. P. 26(b)(5)(A) (“When a party withholds 

information otherwise discoverable by claiming that the information is privileged . . . the party must . . . 

describe the nature of the documents, communications, or tangible things not produced or disclosed – 

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include the following information: i) the basis for withholding each category of documents; (ii) a 

sufficient description of the subject matter of the category of documents to permit Movants to 

evaluate the claim of privilege; (iii) the date range for the set of documents in each category; 

and (iv) an aggregate list of all persons sending and receiving documents in each category.  See 

Joint Report, Dkt. No. 2154 at I(c).  The parties shall meet and confer to discuss when the log 

needs to be produced and the frequency with which the log must be updated.  The Court will 

otherwise adopt the parties’ proposed schedule regarding the procedure for challenging items 

listed in the log.  See Joint Report, Dkt. No. 2154 at II.   

B. Production and Use of Fiscal Plan Development Materials 

When the Renewed Motion was filed originally, it appeared that there was a dispute as 

to which documents needed to be produced to respond to the outstanding requests no. 8, 16 

and 17.  That issue appears to have been resolved.  Thus, Movants have reported that they 

have received information sufficient to respond to the requests for Fiscal Plan Development 

Materials relating to the 2017 Plan, and have requested similar information related to the 2018 

Plan.  Reply, Dkt. No. 2301 at 3 n.4 (“With respect to the [2017 Plan], Respondents have, with 

limited exceptions, posted to the data room materials sufficient to respond to the three 

outstanding document requests (8, 16 & 17).”); id. at 3 (“Because these materials have already 

been provided with respect to the [2017 Plan], Respondents cannot credibly argue that it would 

be unduly burdensome to produce the same documents with respect to the [2018 Plan.]”).  

Movants also reported that Respondents had begun production of similar types of materials 

 

and do so in a manner that, without revealing information itself privilege or protected, will enable other 

parties to assess the claim.”). 

   

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related to the 2018 Plan.  Id. (“The weekend before this reply brief was due, Respondents 

posted to the data room (subject to the mediation agreement restrictions) a model supporting 

the [2018 Plan].  Movants are still evaluating the information provided and are not in a position 

to say that this model provides all of the inputs, formulae and assumptions underlying the 

[2018 Plan].”).   

This Court assumes that the production of 2018 Plan materials to the data room will 

mirror the types of documents produced regarding the 2017 Plan, and that the production will 

be sufficient to respond to the outstanding requests of the Renewed Motion.  Movants are free 

to inform the Court if their review of the produced material yields a different conclusion.  The 

question that remains to be answered is whether that material should be deemed produced 

pursuant to Rule 2004 and, therefore, freely used without restriction in this litigation or 

otherwise.   

Movants claim that production is warranted under Rule 2004 and that use of the 

documents is presently warranted.  Respondents contend that the materials exceed the scope 

of permissible discovery under Rule 2004, and that the materials produced in the data room 

should remain there subject to existing restrictions.  For the reasons detailed herein, this Court 

concludes that the Fiscal Plan Development Materials are discoverable under Rule 2004.  

However, Movants have not shown good cause for their immediate use in these proceedings.  

Therefore, consistent with the parties’ agreement related to the documents in the data room 

produced in response to other requests, Movants are entitled to the information and may 

attempt to use documents in the Title III or adversary proceedings, but Respondents are not 

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prejudiced from objecting to individual documents at the appropriate time.  See Joint Report, 

Dkt. No. 2154, at 1(a).   

Rule 2004 allows for the discovery of information regarding “the liabilities and financial 

condition of the debtor.” Fed. R. Bank. P. 2004(b).  The scope of Rule 2004 discovery is broad 

and at the discretion of the Court.  In re Hammond, 140 B.R. 197, 200‐01 (Bankr. S.D. Ohio 

1992).  However, “[i]f the debtor challenges the right of the examiner to conduct a Rule 2004 

examination, then the examiner has the burden of establishing that good cause exists for the 

taking of the examination.”  Id. (internal quotations and citations omitted).  “Good cause is 

established if one seeking the Rule 2004 examination has shown that such an examination is 

reasonably necessary for the protection of its legitimate interests.”  Id. at 201.  “The movant 

must show some reasonable basis to examine the material sought to be discovered and that 

the requested documents are necessary to establish the movant’s claim or that denial of 

production would cause undue hardship or injustice.”  In re Youk‐See, 450 B.R. 312, 320 (Bankr. 

D. Mass. 2011) (internal quotations, citations, and punctuation omitted). 

Movants argue that they will need to use these documents later in this Title III 

proceeding, especially during confirmation of a plan of adjustment.  They contend that the 

confirmation process entitles them to use “all information that bears on how the Fiscal Plan 

was developed, what assumptions, projections and data were used, and what assumptions, 

projections and data were rejected.”  Movants’ Brief, Dkt. No. 2223 at 3.  For their part, 

Respondents take the position that the issues raised by a plan of adjustment are much more 

limited, and that much of the Fiscal Plan Development Materials may not be relevant to the 

issues to be decided in connection with a plan of adjustment.  Opposition, Dkt. No. 2274 at 6.  

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For the reasons detailed below, this Court does not have to define the standard that will be 

employed in assessing any plan of adjustment at this time.  Nevertheless, the Respondents’ 

objections to the relevancy of the Fiscal Plan Development Materials are not persuasive.  

Movants have successfully shown that the materials are properly discoverable under Rule 2004.   

First, Respondents argue that the Fiscal Plan Development Materials need not be 

produced under Rule 2004 because PROMESA § 106(e) prohibits district courts from reviewing 

fiscal plan certifications.  See Opposition, Dkt. No. 2274 at 4.  This argument is unpersuasive.  

The Movants are not seeking to challenge the fiscal plans.  Rather, they are seeking information 

to understand the past, present and future financial condition of the Commonwealth.  This 

information will form the basis for any plan of adjustment.  This is an appropriate purpose for 

discovery under Rule 2004.  In re Enron Corp., 281 B.R. 836, 840 (Bankr. S.D.N.Y. 2002) (“Rule 

2004 examinations are appropriate for revealing the nature and extent of the bankruptcy 

estate.”).   

For the same reasons, Respondents’ contention that Movants’ “effort to deconstruct 

the Fiscal Plans would not give them the insight into the Commonwealth’s financial condition 

they purport to seek” is equally unavailing.  See Opposition, Dkt. No. 2274 at 5.  Respondents 

claim that a fiscal plan is “a blueprint for further fiscal and economic action by the Common‐

wealth.  It is not a plan of adjustment designed to identify the treatment of each class of 

claims.”  Id.  However, even if just a blueprint, the 2017 and 2018 Plans undeniably describe the 

existing and projected financial condition of the Commonwealth.  Such information not only 

falls squarely within the purpose of Rule 2004, but is instructive in developing an understanding 

of any future plan of adjustment.  Rule 2004 allows parties to broadly examine the financial 

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condition of the debtor – there is no requirement that the information sought directly address 

the treatment of the examiner’s claim.   

Respondents also disagree with Movants’ description of the standard for confirming a 

plan of adjustment.  Movants claim that “for any plan of adjustment to be confirmed over the 

objections of a dissenting class of creditors, it must be, among other things, fair and equitable 

. . . provide creditors with the maximum that the debtor could reasonably pay under the 

circumstances . . . [and] be consistent with the applicable Fiscal Plan.”  Movants’ Brief, Dkt No. 

2223 at 2‐3 (internal quotations, citations, and punctuation omitted).  In contrast, Respondents 

argue that “. . . PROMESA [] does not require the debtor to pay prepetition claimholders as 

much as it can.  Rather, it provides the Court should consider what creditors could recover 

under applicable non‐bankruptcy law, i.e., what a race to the courthouse would produce for the 

creditors under non‐bankruptcy law.”  Opposition, Dkt. No. 2274 at 6 (internal punctuation 

omitted).  Respondents’ argument, however, does not destroy the relevance of the Fiscal Plan 

Development Materials.  Under either the Movants’ or Respondents’ proposed standard, the 

correct interpretation of which the Court need not decide today, the Fiscal Plan Development 

Materials are important for the Movants to have so that they can assess the financial condition 

of the debtor and participate in a plan confirmation process.  Fiscal projections of the debtor 

are relevant no matter how one interprets the plan confirmation standard.   

Finally, Respondents argue that even if the documents at issue are relevant under the 

confirmation standard, “the treatment of prepetition claims and indeed the future plan of 

adjustment will be the subject of a confirmation hearing and focused discovery.”  Id.  As such, 

Respondents argue that Movants have not established a need for burdensome discovery when 

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the materials to be turned over “will likely be completely irrelevant to the eventual plan of 

adjustment[.]”  Id.  Respondents, however, have not shown that a substantial burden exists in 

producing the Fiscal Plan Development Materials, especially since many of the documents have 

already been shared under protective orders or other non‐disclosure agreements.  In addition, 

simply because the documents will not be used imminently does not rebut their relevance 

under Rule 2004.  This Court does recognize, however, that deciding what material in the data 

room should be released from their confidentiality restrictions may involve a lot of unnecessary 

work since the Movants may not be seeking to use much of the material.  This Court’s ruling 

infra regarding when documents can be used alleviates that harm.  As none of the 

Respondents’ arguments diminish Movants’ contention that the materials are relevant, this 

Court orders that the Fiscal Plan Development Materials are discoverable under Rule 2004. 

Having ruled that the documents fall within the scope of Rule 2004, this Court 

nonetheless holds that Movants have not shown good cause for the immediate use of the 

information, which would require the disclosure of many documents currently shared amongst 

the parties pursuant to protective orders and/or non‐disclosure agreements.  The Movants 

have only asserted that they may need to use the materials in connection with the cross‐

examination of experts or other challenges to an eventual plan of adjustment.  No timetable for 

such potential use has been provided.  As a result, this Court orders that while Movants may 

attempt to use the Fiscal Plan Development Materials in the Title III or adversary proceedings, 

Respondents are not prejudiced from objecting to that use on a document by document basis.  

Such objections may include the necessity of keeping a particular protective order in place.  This 

procedure mirrors that identified by the parties in Section I(a) of the Joint Report for the use of 

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documents responsive to other requests in the Renewed Motion.  See Dkt. No. 2154.  Nothing 

in this order shall be construed to dictate when in the course of this proceeding Movants can or 

cannot attempt to use the Fiscal Plan Development Materials.     

IV. CONCLUSION 

This Court hereby orders that the Fiscal Plan Development Materials are discoverable 

consistent with the rulings herein.  Any discovery made available pursuant to this Order shall 

also be made available to the Joinder Parties7

 to the Renewed Motion.  The parties shall meet 

and confer about the schedule for the Respondents’ production of the privilege log called for 

herein.  The Court adopts the parties’ schedule for challenges to items on the privilege log.  See 

Joint Report, Dkt. No. 2154 at II.   

SO ORDERED. 

/ s / Judith Gail Dein               

              Judith Gail Dein 

              United States Magistrate Judge  

DATED: February 23, 2018 

 

7

 The Joiner Parties are the Official Committee of Unsecured Creditors, the Official Committee of Retired 

Employees, Financial Guarantee Insurance Company, the ERS Secured Creditors, and the QTCB 

Noteholder Group.

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