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IN THE 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., 

Debtors.1

PROMESA 

Title III 

No. 17 BK 3283-LTS 

(Jointly Administered) 

RESPONSE OF ASSURED GUARANTY CORP. AND 

ASSURED GUARANTY MUNICIPAL CORP. TO MOTION TO COMPEL 

COMPLIANCE WITH THE AUGUST 10, 2017 STIPULATION AND ORDER 

To the Honorable United States District Judge Laura Taylor Swain: 

Assured Guaranty Corp. and Assured Guaranty Municipal Corp. (collectively, 

“Assured”) respectfully submit this response (the “Response”) to the Motion to Compel 

Compliance with the August 10, 2017 Stipulation and Order filed by the American Federal of 

State, County and Municipal Employees (AFSCME), ECF No. 3092 (the “Motion”) and states as 

follows: 

 

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 

(“Commonwealth”) (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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RESPONSE 

1. Assured submits this Response to address the baseless assertions in the Motion 

that Assured somehow acted improperly by expressing support, along with other Commonwealth 

and COFINA individual creditors, for a consensual framework that would resolve the COFINA 

Title III case and thus make major progress to allow the Commonwealth and its instrumentalities 

to exit these Title III cases without needless litigation. Contrary to the aspersions cast in the 

Motion, Assured and all other parties acted properly in their capacities as individual creditors. 2 

2. Assured cannot and will not provide any detailed responses to the assertions in the 

Motion due to the strict confidentiality restrictions imposed by the mediation agreement. 

However, by openly conceding that the public statements regarding the settlement framework 

“do not state that the formal GO Creditor Representative has had any involvement in these 

negotiations (or even identify who the formal GO Creditor Representative may be),” AFSCME 

admits that it has no evidence that the GO Creditor Representative committed so much as a 

technical violation of the Stipulation. See Motion ¶ 21. This concession is fatal to the Motion, 

and the Motion should therefore be denied, because AFSCME fails to identify any particular 

conduct by the GO Creditor Representative that violates the terms of the CommonwealthCOFINA protocol.3

 

3. Instead, AFSCME complains that individual creditors expressed support for a 

consensual resolution of these Title III cases. But as the Oversight Board observed in its 

 

2

 Curiously, the Motion singles out Assured and the ad hoc group of GO bondholders, and fails to 

acknowledge that a number of other individual COFINA and Commonwealth creditors also publicly 

expressed support for a constructive, consensual resolution in these Title III cases. Given the support of 

these many other parties, it is unclear why the Motion focuses solely on Assured and the ad hoc group of 

GO bondholders. 

3 Assured reserves the right to respond at any appropriate time to any improper disclosure made by the 

debtor, FOMB, the committee, or any other party that violates the confidentiality restrictions of the 

mediation agreement.

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response to the Motion, “nothing bars the GO Creditor Representative or other creditors from 

negotiating, with or without mediation, the treatment of its constituency under a plan of 

adjustment with any party.” ECF No. 3098 ¶ 3. And, of course, AFSCME knows this well, 

because it did the same exact thing in other chapter 9 cases. Indeed, AFSCME individually 

negotiated treatment for certain retirees in the City of Detroit’s chapter 9 plan of adjustment as 

part of a “grand bargain” for Detroit’s retirees, just as Assured did for certain of the bond claims 

within that case. See In re City of Detroit, Mich., 524 B.R. 147, 162, 171-72, 188-90 (Bankr. 

E.D. Mich. 2014). Nothing precludes such conduct by individual creditors. As AFSCME fails 

to point to any untoward conduct (and certainly no conduct that it has not itself engaged in), the 

Motion should be denied. 

4. Finally, aside from the fact that the Motion is meritless, the Motion should not be 

heard until AFSCME files a compliant verified statement under Bankruptcy Rule 2019. 

Bankruptcy Rule 2019(b) provides: 

In a chapter 9 or 11 case, a verified statement setting forth the 

information specified in subdivision (c) of this rule shall be filed by 

every group or committee that consists of or represents, and every entity 

that represents, multiple creditors or equity security holders that are (A) 

acting in concert to advance their common interests, and (B) not 

composed entirely of affiliates or insiders of one another. 

Fed. R. Bankr. P. 2019(b)(1). Entities that purport to represent other creditors in a bankruptcy 

proceeding, such as AFSCME, are not exempt from these disclosure requirements. See Fed. R. 

Bankr. P. 2019(b)(2) (exempting only indenture trustees, administrative agents, class action 

representatives, and governmental units that are not persons from disclosure requirements). 

5. Bankruptcy Rule 2019(c), in turn, requires disclosure of pertinent information that 

gives notice to other creditors regarding the nature of the interests an entity represents, including 

the names of each entity at whose instance the entity, group, or committee purports to act. See 

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Fed. R. Bankr. P. 2019(c)(1). Additional information that must be disclosed includes, among 

other things, the identity of each member represented by such entity and the “nature and amount 

of each disclosable economic interest held in relation to the debtor as of the date of the 

statement.” Fed. R. Bankr. P. 2019(c)(2), (3). Notably, this Court entered an order explicitly 

requiring such entities and groups to “file a supplemental verified statement contemporaneously 

with or within 48 hours after the next instance in which the Rule 2019 Group takes a position 

before the Court[.]” ECF No. 754 § I.3. 

6. Bankruptcy Rule 2019(e) provides that either upon motion of a party in interest or 

upon a court’s own motion, a court may determine that a party failed to comply with Bankruptcy 

Rule 2019’s disclosure requirements. If a court determines that a party has failed to comply with 

Bankruptcy Rule 2019, it may refuse to permit the entity to be heard and may hold invalid any 

objection given, procured, or received by such entity. See Fed. R. Bankr. P. 2019(e)(2). 

7. Despite the clear mandate of the Bankruptcy Rules and this Court’s order, 

AFSCME has never filed a verified statement, despite claiming to be the “exclusive collective 

bargaining representative for approximately 12,000 active Commonwealth employees.” See 

ECF No. 191 ¶¶ 1, 2. AFSCME has clearly taken positions before this Court on behalf of its 

members,4 including by filing the Motion, and therefore falls squarely within the purview of 

Bankruptcy Rule 2019. See Fed. R. Bankr. P. 2019(a)(2) (defining “represents”), (b)(1), (c). 

Despite this non-compliance with the Bankruptcy Rules and this Court’s order, AFSCME seeks 

to inject itself into the center of this Title III case and to control FOMB, the debtors, all creditors, 

 

4

 See, e.g., Case No. 17-03566-LTS, ECF No. 51 (opposition to stay relief motion); Adv. Proc. No. 17-

00242, ECF No. 1 (adversary complaint alleging constitutional violations and violations of PROMESA); 

Adv. Proc. No. 17-00250, ECF Nos. 4, 7 (motion to intervene in adversary proceeding and to consolidate 

adversary proceedings); Case No 17-03283, ECF No. 1610 (opposition to motion to dismiss Title III 

petition); Case No 17-03283, ECF No. 2245 (motion seeking declaration that Title III petition and 

automatic stay do not preclude employee arbitration and grievance proceedings). 

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and the mediators based on non-existent violations of the Stipulation. It is important for 

AFSCME to provide such disclosures to ensure that this Court and other creditors can assess 

whether or not AFSCME is in fact a party in interest with standing to bring the Motion. Based 

on AFSCME’s noncompliance with Bankruptcy Rule 2019, it is virtually impossible for Assured 

and this Court to make that assessment. Consequently, the Motion should not be heard unless 

and until AFSCME files a compliant verified statement. 

CONCLUSION

WHEREFORE, Assured respectfully requests that the Court deny the Motion. 

Dated: San Juan, Puerto Rico 

 May 24, 2018 

CASELLAS ALCOVER & BURGOS P.S.C. 

By: /s/ Heriberto Burgos Pérez 

Heriberto Burgos Pérez 

USDC-PR 204809 

Ricardo F. Casellas-Sánchez 

USDC-PR 203114 

Diana Pérez-Seda 

USDC-PR 232014 

P.O. Box 364924 

San Juan, PR 00936-4924 

Telephone: (787) 756-1400 

Facsimile: (787) 756-1401 

Email: hburgos@cabprlaw.com 

 rcasellas@cabprlaw.com 

 dperez@cabprlaw.com 

Attorneys for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

CADWALADER, WICKERSHAM & TAFT 

LLP 

By: /s/ Howard R. Hawkins, Jr. 

Howard R. Hawkins, Jr.* 

Mark C. Ellenberg* 

Ellen V. Holloman* 

Ellen M. Halstead* 

Gillian Groarke Burns* 

Thomas J. Curtin* 

Casey J. Servais* 

200 Liberty Street 

New York, NY 10281 

Telephone: (212) 504-6000 

Facsimile: (212) 406-6666 

Email: howard.hawkins@cwt.com 

mark.ellenberg@cwt.com 

ellen.holloman@cwt.com 

ellen.halstead@cwt.com 

gillian.burns@cwt.com 

thomas.curtin@cwt.com 

casey.servais@cwt.com 

* Admitted pro hac vice

Attorneys for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

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CERTIFICATE OF SERVICE 

I hereby certify that I filed this document electronically with the Clerk of the 

Court using the CM/ECF System, which will send notification of such filing to all parties of 

record in the captioned case. Further, I directed that the following counsel of record be served 

by U.S. Mail: 

Office of the United States Trustee for Region 21

Edificio Ochoa 

500 Tanca Street, Suite 301 

San Juan, PR 00901-1922 

Gerardo J. Portela Franco 

Puerto Rico Fiscal Agency and Financial 

Advisory Authority (AAFAF) 

De Diego Ave. Stop 22 

San Juan, Puerto Rico 00907 

John J. Rapisardi, Esq. 

O’Melveny & Myers LLP 

7 Times Square 

New York, New York 10036 

Luis C. Marini-Biaggi, Esq. 

Marini Pietrantoni Muniz, LLC 

MCS Plaza, Suite 500 

255 Ponce de León Ave. 

San Juan, PR 00917 

Martin J. Bienenstock, Esq. 

Proskauer Rose LLP 

Eleven Times Square 

New York, New York 10036-8299 

Hermann D. Bauer, Esq. 

O’Neill & Borges LLC 

250 Muñoz Rivera Ave., Suite 800 

San Juan, PR 00918-1813 

Nancy A. Mitchell, Esq. 

Greenberg Traurig LLP 

200 Park Avenue 

New York, New York 10166 

Arturo Diaz-Angueira, Esq. 

Cancio, Nadal, Rivera & Diaz, P.S.C. 

403 Muñoz Rivera Ave. 

San Juan (Hato Rey), PR 00918-3345 

Luc A. Despins, Esq. 

Paul Hastings LLP 

200 Park Avenue 

New York, New York 10166 

Juan. J. Casillas Ayala 

Casillas, Santiago & Torres LLC 

El Caribe Office Building 

53 Palmeras Street, Suite 1601 

San Juan, PR 00901-2419 

Robert Gordon, Esq. 

Jenner & Block LLP 

919 Third Avenue 

New York, New York 10022 

A.J. Bennazar-Zequeira 

Bennazar, Garcia & Milian, C.S.P. 

Edificio Union Plaza PH-A piso 18 Avenida 

Ponce de Leon #416 

Hato Rey, PR 00918 

At New York, New York, 24th day of May, 2018. 

By: /s/ Howard R. Hawkins, Jr.* 

 Howard R. Hawkins, Jr. 

 * Admitted pro hac vice 

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