Reply Deadline: June 13, 2018 at 5:00 p.m. (A.S.T.)

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) 

In re: 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

 as representative of 

PUERTO RICO SALES TAX FINANCING 

CORPORATION (“COFINA”), 

 Debtor. 

 PROMESA 

 Title III 

 No. 17 BK 3284-LTS 

 

 

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 (“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) (Title III case numbers are listed as 

Bankruptcy Case numbers due to software limitations). 

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THE OFFICIAL COMMITTEE OF UNSECURED 

CREDITORS OF THE COMMONWEALTH OF 

PUERTO RICO, 

 as agent of 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

 as representative of 

THE COMMONWEALTH OF PUERTO RICO, 

 Plaintiff, 

 v. 

BETTINA WHYTE, 

 as agent of 

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO, 

 as representative of 

THE PUERTO RICO SALES TAX FINANCING 

CORPORATION, 

 Defendant. 

 Adv. Proc. No. 17-257-LTS 

 in 17 BK 3283-LTS 

RESPONSE OF ASSURED GUARANTY CORP. 

AND ASSURED GUARANTY MUNICIPAL CORP. TO 

THE JOINT URGENT MOTION OF COMMONWEALTH AGENT AND 

COFINA AGENT REQUESTING THAT COURT HOLD DECISION ON 

MOTIONS FOR SUMMARY JUDGMENT IN ABEYANCE FOR 60-DAY PERIOD 

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TO THE HONORABLE COURT: 

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

“Assured”) hereby respond to the Joint Urgent Motion of Commonwealth Agent and COFINA 

Agent Requesting That Court Hold Decision on Motions for Summary Judgment in Abeyance for 

60-Day Period (Adv. Proc. No. 17-257-LTS, ECF No. 484) (the “Motion”) filed by the 

Commonwealth Agent and COFINA Agent and states as follows: 

1. Under the terms of the Stipulation And Order Approving Procedure To Resolve 

Commonwealth-COFINA Dispute, Case No. 17 BK 3283-LTS, ECF No. 996 (the 

“Stipulation”),2

 Assured and the Ad Hoc Group of General Obligation Bondholders (the “GO 

Group”) selected one of the two Commonwealth Creditor Representatives. Paragraph 4.i of the 

Stipulation provides: 

[I]f the Commonwealth Creditor Representative selected by the 

[GO Group] and [Assured] objects to [a] settlement, the settlement 

shall not be filed with the Court unless and until Chief Bankruptcy 

Judge Barbara Houser, serving as Mediation Team Leader by order 

dated June 14, 2017 of U.S. District Judge Laura Taylor Swain, 

makes a determination that, under all the circumstances, it is 

appropriate for such settlement to be presented to the Court for 

approval. 

ECF No. 996 at 7 (¶ 4.i). While Assured has been consulted to a limited extent, the 

Commonwealth Agent did not seek Assured’s input with respect to a number of important issues 

addressed by the Agents’ agreement in principle. 

2. Assured does not oppose the Agents’ request in the Motion for a 60-day delay in 

the Court’s issuance of a decision on the summary judgment motions in the Commonwealth-

 

2

 Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in (i) the 

Motion, (ii) Term Sheet, or (iii) the Stipulation, as applicable. 

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COFINA Dispute, provided that the Agents use the requested 60-day abeyance period to 

(i) involve Assured and other GO Bond creditors in the negotiations and (ii) remedy a number of 

important defects in the preliminary Terms and Conditions of Agreement in Principle to Resolve 

Commonwealth-COFINA Dispute (the “Term Sheet”) disclosed by the Agents on June 7, 2018. 

See Exhibit A to Joint Informative Motion of Commonwealth Agent and COFINA Agent 

Disclosing Agreement in Principle, Adv. Proc. No. 17-257-LTS, ECF No. 486-1. 

3. For example, the Term Sheet provides for the establishment of an escrow account 

to hold the Commonwealth’s share of PSTBA, with “such escrowed funds being allocated to 

holders of claims against the Commonwealth under a Commonwealth Title III plan of 

adjustment.” Adv. Proc. No. 17-257-LTS, ECF No. 486-1 at 1. The Term Sheet then goes on to 

provide that “the Commonwealth shall have recourse to the funds in escrow . . . to the extent 

necessary to pay for essential services, as determined by the Financial Oversight and 

Management Board for Puerto Rico.” Id. at 2. This provision raises several substantive and 

procedural problems, and, accordingly, requires additional discussion. 

4. As another example, the Term Sheet in its present form contains various overly 

broad releases that—inadvertently or not—could be read to undermine the GO Bonds’ 

constitutional first-priority claim to all “available resources” (including PSTBA). Id. at 5-6. 

These releases need to be significantly narrowed and refined before they could be incorporated 

into a viable settlement or Title III plan. 

5. These are just two of the important issues requiring further creditor involvement 

before a definitive agreement can be reached. There are several others. 

6. Paragraph 4.f of the Stipulation expressly provides that “the Commonwealth 

Agent shall consult with . . . [Assured] . . . regarding the status of negotiations with respect to 

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settlement of the Commonwealth-COFINA dispute.” Case No. 17 BK 3283-LTS, ECF No. 996 

at 6 (¶ 4.f). Paragraph 4.f also requires each Agent to “consult with the major creditor 

constituencies of the Debtor it represents.” Id. Accordingly, pursuant to paragraph 4.f of the 

Stipulation, Assured expects that both the Commonwealth Agent and the COFINA Agent will 

consult openly, honestly, and completely with Assured and the other major creditors as they 

work over the next 60 days towards a viable settlement that could have Assured’s support. 

Dated: June 11, 2018 

 New York, New York 

CASELLAS ALCOVER & BURGOS P.S.C. 

 /s/ Heriberto Burgos Pérez 

Heriberto Burgos Pérez 

USDC-PR No. 204,809 

Ricardo F. Casellas-Sánchez 

USDC-PR No. 203,114 

Diana Pérez-Seda 

USDC-PR No. 232,014 

P.O. Box 364924 

San Juan, PR 00936-4924 

Tel.: (787) 756-1400 

Fax: (787) 756-1401 

Email: hburgos@cabprlaw.com 

 rcasellas@cabprlaw.com 

 dperez@cabprlaw.com 

Counsel for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

CADWALADER, WICKERSHAM & TAFT LLP 

 /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 

Tel.: (212) 504-6000 

Fax: (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

Counsel for Assured Guaranty Corp. and 

Assured Guaranty Municipal Corp. 

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USActive 46357988.9

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, this 11th day of June, 2018. 

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

 Howard R. Hawkins, Jr.* 

 * Admitted pro hac vice 

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