180501 ORDER RE MASTER LINK STAY RELIEF VERSION MAY 1, 2018 1 

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, (Jointly Administered) 

et al., 

 Debtors.1

----------------------------------------------------------x 

In re: PROMESA 

 Title III 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

as representative of No. 17 BK 4780-LTS 

This order relates to 

PREPA and shall be filed in 

the lead Case No. 17 BK 

3283-LTS and Case No. 17 

BK 4780-LTS 

PUERTO RICO ELECTRIC POWER 

AUTHORITY, 

 Debtor. 

----------------------------------------------------------x 

MEMORANDUM ORDER DENYING MASTER LINK CORPORATION’S

MOTION FOR RELIEF FROM STAY (DOCKET ENTRY NO. 2850) 

 

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).

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180501 ORDER RE MASTER LINK STAY RELIEF VERSION MAY 1, 2018 2 

Before the Court is a motion filed by Master Link Corporation (the “Movant”) for 

relief from the automatic stay imposed by the filing of the above-captioned Title III case on a 

breach of contract lawsuit seeking damages, and declaratory and injunctive relief, commenced in 

the Court of First Instance in San Juan, Puerto Rico, captioned Master Link Corporation v. 

Autoridad de Energía Eléctrica, Civil Case No. K AC2016-0818 (604) (the “Lawsuit”), by 

Movant against the Puerto Rico Electric Power Authority (“PREPA” or the “Debtor”). For the 

following reasons, the Motion is denied. 

BACKGROUND

Movant, the named Plaintiff in the Lawsuit, seeks to continue to prosecute the 

Lawsuit through the entry but not execution of judgment. (Case No. 17-3283, Docket Entry No. 

2850, Motion for Relief of Stay (the “Motion”), ¶ 3.) In the Lawsuit, Movant seeks over $4.5 

million in damages, and injunctive and other declaratory relief, in connection with a contract (the 

“Contract”) entered into by and between Movant and PREPA on January 3, 2011, for the 

rehabilitation of the Municipality of Culebra’s power station facilities. (Id. ¶ 4.) Movant seeks 

to continue the Lawsuit, to, among other things, obtain a damage award, void PREPA’s 

termination of the Contract and suspension of Movant from PREPA’s Suppliers Registry, and 

obtain an order directing PREPA to permit Movant to complete the construction contemplated 

under the Contract. (Id. ¶ 5.) Movant asserts in the Motion that “written discovery was almost 

completed and depositions were about to commence” and that Movant’s summary judgment 

motion “was unopposed.” (Id. ¶ 7.) Movant further asserts that relief from the automatic stay is 

appropriate for the following reasons, among others: (i) depositions were the only pending 

discovery and a schedule had been set for PREPA’s opposition to Movant’s summary judgment 

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180501 ORDER RE MASTER LINK STAY RELIEF VERSION MAY 1, 2018 3 

motion, (ii) continuation of the Lawsuit would not interfere with PREPA’s Title III case and 

would instead potentially assist with the recovery if Movant were to prevail and be permitted to 

complete its contract for Culebra, and (iii) continuation of the Lawsuit will permit Movant to 

quantify its claims against PREPA. (Id. ¶ 14.) On April 20, 2018, PREPA filed its objection 

(the “Debtor’s Objection”) to the Motion. (Case No. 17-3283, Docket Entry No. 2935; Case No. 

17-4780, Docket Entry No. 805.) On April 27, 2018, Movant filed a reply to the Debtor’s 

Objection (the “Movant’s Reply”). (Case No. 17-3283, Docket Entry No. 2975.) In Movant’s 

Reply, it asserts that the continuation of the automatic stay threatens it with reputational and 

financial harm, including execution of a performance bond that could increase the amount of 

work done to finish the job and, concomitantly, Movant’s financial exposure. The Court has 

reviewed the submissions thoroughly. 

The Debtor argues that the Motion must be denied for several reasons, including 

interference with the “breathing space” needed by the Debtor to rebuild PREPA’s infrastructure 

and restore power to the people of the Commonwealth, which is essential to PREPA’s Title III 

case. The Debtor further cites burdens on Debtor resources that would be occasioned by 

resumption of the litigation of the Lawsuit. Specifically, the Debtor disputes Movant’s 

assertions that written discovery was almost complete and depositions were about to begin prior 

to the Title III filing. The Debtor argues that it must prepare pre-trial briefing, respond to 

Movant’s summary judgment motion, prepare and attend depositions and engage in expert 

discovery, all of which would divert the already strained and limited resources of the Debtor, the 

Debtor’s management, and its representatives. 

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180501 ORDER RE MASTER LINK STAY RELIEF VERSION MAY 1, 2018 4 

DISCUSSION

Section 362(a) of the Bankruptcy Code, made applicable by Section 301(a) of 

PROMESA, 48 U.S.C. § 2161, imposes an automatic stay on “the commencement or 

continuation . . . of a judicial, administrative, or other action or proceeding against the debtor that 

was or could have been commenced before the commencement of the case under this title . . . .” 

11 U.S.C. § 362(a)(1); see also PROMESA § 301(a) (incorporating 11 U.S.C. § 362 into Title III 

cases). Section 362(d)(1) of Title 11 of the United States Code, made applicable in these 

proceedings by Section 301 of PROMESA, 48 U.S.C. § 2161, permits a court to grant relief from 

the automatic stay “for cause.” To determine whether cause exists to lift the bankruptcy stay, 

courts in this district rely on the factors first enumerated by the United States Court of Appeals 

for the Second Circuit in In re Sonnax Indus., Inc., 907 F.2d 1280, 1286 (2d Cir. 1990) 

(“Sonnax”). See, e,g., Brigade Leveraged Capital Structures Fund Ltd. v. Garcia-Padilla, 217 F. 

Supp. 3d 508, 518 (D.P.R. 2016) (citing Sonnax). Of particular relevance to the instant case are 

the following factors identified by the Sonnax Court: “whether relief would result in a partial or 

complete resolution of the issues,” “lack of any connection with or interference with the 

bankruptcy case,” “the interests of judicial economy and the expeditious and economical 

resolution of litigation,” “whether litigation in another forum would prejudice the interests of 

other creditors,” and the “impact of the stay on the parties and the balance of harms.” Sonnax, 

907 F.2d at 1286. 

The Sonnax criteria do not weigh in Movant’s favor with respect to the 

continuation of the Lawsuit. Continuation of the Lawsuit, in which neither discovery nor 

dispositive motion practice has been completed, would not necessarily result in an expeditious 

resolution of Movant’s claims. Thus, the requested relief from the automatic stay would not 

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180501 ORDER RE MASTER LINK STAY RELIEF VERSION MAY 1, 2018 5 

likely result in a complete or materially significant partial resolution of Movant’s claims against 

PREPA in the near term. Nor, notwithstanding Movant’s suggestion that an eventual court 

victory might put it in a position to complete the work on Culebra, would the requested relief 

advance in any material way the progress of PREPA’s PROMESA Title III debt adjustment 

proceedings, since the restoration of the power infrastructure and forward planning for PREPA 

are the current focus of PREPA’s activity. Movant’s financial claim and any attendant factual 

and equitable issues relevant to relief can be adjudicated within the context of this Title III 

proceeding. For the same reasons, relief from stay to continue the Lawsuit would not serve the 

interests of judicial economy or the economical resolution of Movant’s dispute with PREPA. 

Furthermore, the continuation of the Lawsuit would prejudice PREPA at a time when its 

resources are constrained by requiring the expenditure of PREPA’s already depleted resources 

(both financial and personnel) and diverting attention from the reconstruction of PREPA’s 

electrical grid, which was destroyed by Hurricane Maria. The hardship to PREPA of devoting its 

legal and management resources to litigation of the Lawsuit at a time when it must focus on the 

restoration of power and strengthening of the energy infrastructure for the vast majority of Puerto 

Rico’s residents and businesses outweighs the burden on Movant of delay of resolution of its 

claim and the impact on its own business plan, a burden which is shared with other creditors. 

CONCLUSION

For the foregoing reasons, Movant’s motion is denied and the automatic stay 

continues in place. See 11 U.S.C. § 362(a). This Memorandum Order resolves docket entry no. 

2850 in case no. 17-3283. 

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180501 ORDER RE MASTER LINK STAY RELIEF VERSION MAY 1, 2018 6 

In light of Movant’s expressed concerns regarding the potential impact on its 

commercial prospects of the unresolved controversy as to whether there was a factual basis for 

termination and the potential for exposure to increased liability from execution of Movant’s 

performance bond, the Court encourages the parties to meet and confer promptly to seek to 

develop a mutually acceptable resolution of the outstanding performance bond issue or, at 

minimum, an agreed statement regarding the nature and pendency of the stayed litigation that 

can be used in connection with inquiries as Movant bids for business. The parties must file a 

joint status report concerning their efforts by June 4, 2018. 

SO ORDERED. 

Dated: May 1, 2018 

 /s/ Laura Taylor Swain 

 LAURA TAYLOR SWAIN

 United States District Judge 

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