IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

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In re 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

as representative of 

THE COMMONWEALTH OF PUERTO RICO et al., 

Debtors.1

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: 

: 

: 

: 

: 

: 

: 

: 

PROMESA 

Title III 

Case No. 17-BK-3283 (LTS) 

(Jointly Administered) 

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COFINA AGENT’S URGENT MOTION TO COMPEL THE 

PUERTO RICO DEPARTMENT OF TREASURY TO COMPLY 

WITH THE ORDERS SETTING PROCEDURES FOR INTERIM 

COMPENSATION AND REIMBURSEMENT OF EXPENSES OF PROFESSIONALS 

Bettina M. Whyte (the “COFINA Agent”), in her capacity as the appointed agent 

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

representative of the Puerto Rico Sales Tax Financing Corporation (“COFINA”), respectfully 

submits this urgent motion (the “Motion to Compel”), seeking entry of an order compelling the 

Puerto Rico Department of Treasury, as part of the Commonwealth’s central government 

(“Hacienda”), to pay all amounts due to the COFINA Agent and her professionals under the 

Interim Compensation Orders and the Second Interim Fee Period Order (each as defined below). 

In support of this Motion, the COFINA Agent respectfully states: 

 

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). 

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1. At the omnibus hearing on June 6, 2018, counsel to the fee examiner 

disclosed to the Court that there were a number of professionals that had not received payments of 

amounts due under the Interim Compensation Orders.2 The Court suggested that the parties try to 

resolve any non-payment provisions among themselves, but indicated that if the Court’s assistance 

became necessary, parties should submit “an appropriate application to put the issue before me.”3 

2. It has now been almost six weeks since the Court’s comments at that 

hearing, and the COFINA Agent and her retained professionals4 have still not received any 

payments on account of (i) several months of fees and expenses that are due and owing pursuant 

to the Interim Compensation Orders, or (ii) the “held back” amounts that were approved pursuant 

to the Court’s Omnibus Order Awarding Interim Allowance of Compensation for Professional 

Services Rendered and Reimbursement Of Expenses for the Second Interim Compensation Period 

From October 1, 2017 Through January 31, 2018 [Docket No. 3279] (the “Second Interim Fee 

Period Order”). The COFINA Agent Applicants have complied with all of the requirements of 

the Interim Compensation Orders, and no objections were filed to the fee and expense requests 

that are the subject of this Motion to Compel. There is no dispute that the fees and expenses are 

due and owing under the Interim Compensation Orders (all amounts that are due and owing to the 

COFINA Agent Applicants, the “Past Due Amounts”).5

 

 

2

 Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Urgent 

Motion to Compel the Puerto Rico Department of Treasury to Comply with the First and Second Amended 

Orders Setting Procedures for Interim Compensation and Reimbursement of Expenses of Professionals (the 

“Retiree Committee Motion”) [Docket No. 3513]. 3

 Hearing Transcript, June 6, 2018, 41:16-17. 

4

 Willkie Farr & Gallagher LLP (“WF&G”) is counsel to the COFINA Agent, Klee, Tuchin, Bogdanoff & 

Stern LLP (“KTBS”) is special municipal bankruptcy counsel to the COFINA Agent, and the NavarroCabrer Law Offices are local counsel to the COFINA Agent (“Navarro-Cabrer,” and together with the 

COFINA Agent, WF&G and KTBS, the “COFINA Agent Applicants”). 5

 An itemized schedule of the Past Due Amounts is attached hereto as Exhibit B. 

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3. Although the COFINA Agent Applicants have repeatedly discussed the 

non-payment of the Past Due Amounts with counsel to Hacienda, there have been no payments 

made for several months, and there has been no indication from counsel to Hacienda as to 

specifically when payments will be made. The COFINA Agent Applicants understand that the 

Court has many more pressing substantive matters in these title III cases, but the COFINA Agent 

Applicants reluctantly ask for the Court’s assistance in resolving this matter because all nonjudicial options have been exhausted. 

4. Consistent with the Interim Compensation Orders, the COFINA Agent 

Applicants timely served monthly statements for their fees and expenses on Hacienda, the 

Oversight Board, and the other notice parties under the Interim Compensation Orders. (Interim 

Compensation Orders ¶ 2). No objections were received to these monthly fee statements, and the 

COFINA Agent Applicants served statements of no objection, and requested payment of the 

amounts due. 

5. Pursuant to paragraph 2.c of the Interim Compensation Orders, following 

the expiration of the 10-day objection period to monthly fee statements, “the Debtors in whose 

cases such Professionals are retained and/or employed shall promptly pay, and in no event pay 

later than fourteen (14) calendar days after receiving the Monthly Fee Objection Statement, the 

Professional an amount equal to the lesser of (i) 90% of the fees and 100% of the expenses 

requested in the applicable Monthly Fee Statement.” (Interim Compensation Orders ¶ 2.c).

6. Notwithstanding the requirements of the Interim Compensation Orders, and 

despite numerous requests for these payments by the COFINA Agent Applicants, Hacienda has 

not paid the Past Due Amounts. The COFINA Agent Applicants have worked in earnest with 

counsel for Hacienda to try to resolve this issue without motion practice, but have been 

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unsuccessful. For example, counsel to the COFINA Agent sent repeated e-mails to counsel for 

Hacienda to discuss the status of these outstanding payments, and counsel to Hacienda replied on 

June 13 that “AAFAF is working on the various COFINA fees,” and replied on July 18 “Will 

follow up (again) now,” but counsel to the COFINA Agent has not received any update. As 

another example, counsel for Hacienda promised KTBS an update on the status of their outstanding 

fees and expenses by June 20, but to date no update has been received, despite repeated requests 

by KTBS since June 20. 

7. Separately, the COFINA Agent Applicants are also experiencing the same 

“erroneous withholding” described in the Retiree Committee Motion; Hacienda has applied a 29% 

withholding on its most recent payments to the COFINA Agent Applicants (the “Tax 

Withholding”),6 even though that tax only applies for work that is physically performed while 

located in Puerto Rico. Although the COFINA Agent Applicants have repeatedly certified that 

none of the fees and expenses at issue were incurred in Puerto Rico (except for Navarro-Cabrer, 

but Navarro-Cabrer is exempt from the 29% withholding because it is located in and doing 

business in Puerto Rico), the amounts that have been erroneously withheld have not been repaid. 

8. The Tax Withholding is not applicable to the Past Due Amounts, and any 

such amounts that have been improperly withheld should be paid to the COFINA Agent Applicants 

promptly, and the fees and expenses that are yet to be paid must not have any Tax Withholding 

applied to them (unless work was performed while physically located in Puerto Rico). 

 

6

 For example, WF&G’s most recent payment from Hacienda was for its February fee statement, and it 

included a 29% withholding instead of the 10% “holdback” that is required by the Interim Compensation 

Order. 

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CONCLUSION 

For the foregoing reasons, the COFINA Agent respectfully requests that this Court 

(i) enter an order, in substantially the form attached hereto as Exhibit A, requiring Hacienda to 

make payment of the Past Due Amounts (without any Tax Withholding) on or before July 31, 

2018, and (ii) grant such other relief as may be just and proper. 

Dated: July 16, 2018 

 New York, New York 

By: /s/ Joseph G. Minias 

Respectfully submitted, 

By: /s/ Nilda M. Navarro-Cabrer 

Matthew A. Feldman (pro hac vice) 

Joseph G. Minias (pro hac vice) 

Antonio Yanez, Jr. (pro hac vice) 

Martin L. Seidel (pro hac vice) 

James C. Dugan (pro hac vice) 

Jeffrey B. Korn (pro hac vice) 

Paul V. Shalhoub (pro hac vice) 

WILLKIE FARR & GALLAGHER LLP 

787 Seventh Avenue 

New York, New York 10019 

Telephone: (212) 728-8000 

Facsimile: (212) 728-8111 

Email: mfeldman@willkie.com 

 jminias@willkie.com 

 ayanez@willkie.com 

 mseidel@willkie.com 

 jdugan@willkie.com 

 jkorn@willkie.com 

 pshalhoub@willkie.com 

Counsel to the COFINA Agent 

Nilda M. Navarro-Cabrer 

USDC – PR No. 201212 

NAVARRO-CABRER LAW OFFICES 

El Centro I, Suite 206 

500 Muñoz Rivera Avenue 

San Juan, Puerto Rico 00918 

Telephone: (787) 764-9595 

Facsimile: (787) 765-7575 

Email: navarro@navarrolawpr.com 

Local Counsel to the COFINA Agent 

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Kenneth N. Klee (pro hac vice) 

Daniel J. Bussel (pro hac vice) 

Jonathan M. Weiss (pro hac vice) 

KLEE, TUCHIN, BOGDANOFF & STERN LLP 

1999 Avenue of the Stars 

39th Floor 

Los Angeles, California 90067 

Telephone: (310) 407-4000 

Facsimile: (310) 407-9090 

Email: kklee@ktbslaw.com 

 dbussel@ktbslaw.com 

 jweiss@ktbslaw.com 

Special Municipal Bankruptcy Counsel 

to the COFINA Agent 

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IN THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO 

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

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 

Case No. 17-BK-3283 (LTS) 

(Jointly Administered) 

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

 

ORDER GRANTING COFINA AGENT’S URGENT MOTION TO COMPEL THE 

PUERTO RICO DEPARTMENT OF TREASURY TO COMPLY 

WITH THE ORDERS SETTING PROCEDURES FOR INTERIM 

COMPENSATION AND REIMBURSEMENT OF EXPENSES OF PROFESSIONALS 

Upon the motion for an order compelling Hacienda to pay all amounts due to the COFINA 

Agent and her professionals under the Interim Compensation Orders and the Second Interim Fee 

Period Order (the “Motion to Compel”); and the Court having found it has subject matter 

jurisdiction over this matter pursuant to section 306(a) of PROMESA; and it appearing that venue 

is proper pursuant to section 307(a) of PROMESA; and the Court having found that the COFINA 

Agent provided adequate and appropriate notice of the Motion to Compel under the circumstances 

and that no other or further notice is required; and the Court having reviewed the Motion to 

Compel; and the Court having determined that the legal and factual bases set forth in the Motion 

to Compel establish just cause for the relief granted herein; and any objections to the relief 

 

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). 

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requested in the Motion to Compel having been withdrawn or overruled on the merits; and after 

due deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT: 

1. The Motion to Compel is granted to the extent set forth herein. 

2. Capitalized terms shall have the meanings ascribed to such terms in the 

Motion to Compel. 

3. Hacienda must make payment of all Past Due Amounts (without any Tax 

Withholding) on or before July 31, 2018. 

4. The Court retains jurisdiction to hear and determine all matters, claims and 

disputes arising from or relating to implementation of this Order. 

Dated: , 2018 

San Juan, Puerto Rico 

_______________________________ 

Hon. Laura Taylor Swain 

United States District Judge 

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EXHIBIT B 

Schedule of Past Due Amounts 

Professional Period Amount Unpaid and Outstanding (less 

the 10% holdback, if applicable) 

COFINA Agent March $115,852.77 

April $114,369.66 

May $83,851.18 

Second Interim Fee 

Period Order 

$16,094.50 

WF&G February $385,055.81 (erroneous Tax Withholding)

March $1,814,388.00

April $1,196,221.02 

May $626,261.37 

Second Interim Fee 

Period Order 

$501,912.39 

KTBS March $178,598.13 

April $225,687.25 

May $177,318.41 

Second Interim Fee 

Period Order 

$31,116.30 

Navarro-Cabrer March $1,486.20

April $15,592.50

May $17,206.30 

Second Interim Fee 

Period Order 

$9,516.25

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