Hearing Date: June 28, 2017 at 9:30 a.m.

 

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.1

Debtors. 

PROMESA 

Title III 

No. 17 BK 3283-LTS 

(Jointly Administered) 

Re: Docket No. 210 

LIMITED OBJECTION OF AMBAC ASSURANCE CORPORATION TO MOTION OF 

DEBTOR ENTITIES FOR ORDER (A) PROHIBITING UTILITIES FROM ALTERING, 

REFUSING, OR DISCONTINUING SERVICE, (B) DEEMING UTILITIES 

ADEQUATELY ASSURED OF FUTURE PERFORMANCE, AND (C) ESTABLISHING 

PROCEDURES FOR DETERMINING ADEQUATE ASSURANCE OF PAYMENT 

Ambac Assurance Corporation (“Ambac”), a holder and/or insurer of 

approximately $2.7 billion of bonds issued by the Debtors and other Commonwealth 

instrumentalities, hereby submits this limited objection (the “Objection”) to the Motion of Debtor 

Entities For Order (A) Prohibiting Utilities from Altering, Refusing, or Discontinuing Service, (B) 

Deeming Utilities Adequately Assured of Future Performance, and (C) Establishing Procedures 

for Determining Adequate Assurance of Payment (D.I. 210) (the “Utilities Motion”). In support 

of its Objection, Ambac respectfully submits as follows: 

 

1

 The Debtors in these Title III cases, along with each Debtor’s respective bankruptcy case number and the last four 

digits of each Debtor’s federal tax identification number, as applicable, are the (i) Commonwealth of Puerto Rico (the 

“Commonwealth”) (Case No. 17 BK 3283-LTS) (Tax ID: 3481) and (ii) Puerto Rico Sales Tax Financing Corporation 

(“COFINA”) (Case No. 17 BK 3284) (Tax ID: 8474). 

Case:17-03283-LTS Doc#:367 Filed:06/16/17 Entered:06/16/17 15:34:12 Desc: Main

Document Page 1 of 4
2 

LIMITED OBJECTION 

1. Ambac objects to the Utilities Motion only to the extent it requests an order 

directing all Debtors (rather than only the Debtor to which an applicable Utility Provider2 provides 

service) to provide each Utility Provider with an administrative expense priority claim.3

 AAFAF 

has acknowledged that COFINA itself does not have any utility providers,4

 and nothing in section 

366(a) of the Bankruptcy Code requires a debtor to provide adequate assurance to a utility that has 

no service relationship with, and is owed no debt by, such debtor. 

2. The Court has made plain that the joint administration of the Debtors’ Title III cases 

is “for procedural purposes only,” and no substantive rights will be affected by such joint 

administration.5

 However, by its terms, the proposed order accompanying the Utilities Motion 

(the “Utilities Order”) would affect the substantive rights of COFINA by granting non-creditors 

with an administrative expense priority claim against COFINA. 

3. As such, if the Court is otherwise prepared to grant the relief requested in the Utility 

Motion, the Utilities Order should be modified throughout to clarify that the rights and obligations 

established in the order are unique to the Commonwealth, which is the only Debtor that has a 

relationship with a Utility Provider. Attached as Exhibit 1 to this limited Objection is a redline of 

 

2

 Capitalized terms used by not defined herein shall have the meaning ascribed to them in the Utilities Motion. 

3

 Although AAFAF acknowledges that the Commonwealth is responsible for Utility Services (Utilities Motion ¶ 11), 

AAFAF also contemplates that the Debtors, a term defined to include COFINA, “will provide Utility Providers with 

an administrative expense priority claim for postpetition, unpaid Utility Services[.]” Id. ¶ 13. 

4

 See Motion to Withdraw May 22, 2017 Motion Filed in Case No. 17-BK-3284 (LTS) Requesting an Order (A) 

Prohibiting Utilities from Altering, Refusing, or Discontinuing Service, (B) Deeming Utilities Adequately Assured of 

Future Performance, and (C) Establishing Procedures for Determining Adequate Assurance of Payment (Case No. 17-

BK-3284-LTS, Dkt. No. 117) (the “Withdrawal Motion”) ¶ 3 (acknowledging that COFINA itself does not have any 

utility providers and reserving the right to re-file the motion in COFINA’s Title III proceeding “should any party 

claiming to be a utility provider to COFINA come[] forward and [identify] itself.”). The Court granted the Withdrawal 

Motion on May 25, 2017. (Order, Case No. 17-BK-3284-LTS, Dkt. No. 118.) 

5

 Order Pursuant to PROMESA Section 304(g) and Bankruptcy Rule 1015(b) Directing Joint Administration of Tittle 

III Cases and Granting Related Relief (Dkt. No. 242) ¶¶ 2, 7. 

Case:17-03283-LTS Doc#:367 Filed:06/16/17 Entered:06/16/17 15:34:12 Desc: Main

Document Page 2 of 4
3 

the Utility Order, setting forth the changes that would clarify that the relief requested by AAFAF 

applies only to the Commonwealth, and not to COFINA. 

CONCLUSION 

For the reasons set forth herein, Ambac respectfully requests that the Court (i) deny 

the Utilities Motion unless the Utilities Order is revised as set forth on Exhibit 1 and (ii) grant such 

other and further relief as the Court deems appropriate. 

Dated: June 16, 2017 

 San Juan, Puerto Rico 

FERRAIUOLI LLC 

By: /s/ Roberto Cámara-Fuertes 

Roberto Cámara-Fuertes (USDC-PR No. 

219002) 

Sonia Colón (USDC-PR No. 213809) 

221 Ponce de León Avenue, 5th Floor 

San Juan, PR 00917 

Telephone: (787) 766-7000 

Facsimile: (787) 766-7001 

Email: rcamara@ferraiuoli.com 

 scolon@ferraiuoli.com 

MILBANK, TWEED, HADLEY & McCLOY LLP 

By: /s/ Dennis F. Dunne 

Dennis F. Dunne 

Andrew M. Leblanc

Atara Miller 

Grant R. Mainland 

(admitted pro hac vice) 

28 Liberty Street 

New York, NY 10005 

Telephone: (212) 530-5770 

Facsimile: (212) 822-5770 

Email: ddunne@milbank.com 

 aleblanc@milbank.com 

 amiller@milbank.com 

 gmainland@milbank.com 

Attorneys for Ambac Assurance Corporation

 

Case:17-03283-LTS Doc#:367 Filed:06/16/17 Entered:06/16/17 15:34:12 Desc: Main

Document Page 3 of 4
4 

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/ Roberto Cámara-Fuertes 

Roberto Cámara-Fuertes (USDC-PR No. 219002) 

221 Ponce de León Avenue, 5th Floor 

San Juan, PR 00917 

Telephone: (787) 766-7000 

Facsimile: (787) 766-7001 

Email: rcamara@ferraiuoli.com 

Case:17-03283-LTS Doc#:367 Filed:06/16/17 Entered:06/16/17 15:34:12 Desc: Main

Document Page 4 of 4