Hearing Date: June 6, 2018 at 9:30 a.m. (AST)

UNITED STATES DISTRICT COURT 

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

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

PROMESA

Title III

No. 17 BK 3283-LTS

(Jointly Administered)

OFFICIAL COMMITTEE OF UNSECURED 

CREDITORS OF PUERTO RICO

 Movant, 

v.

THE FINANCIAL OVERSIGHT AND 

MANAGEMENT BOARD FOR PUERTO RICO

 as representative of

THE COMMONWEALTH OF PUERTO RICO, et al.,

 Respondents. 

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

PROMESA

Title III

Re: ECF No. 3066

OBJECTION OF DEBTORS TO RENEWED MOTION

OF OFFICIAL COMMITTEE OF UNSECURED CREDITORS 

FOR ENTRY OF ORDER, UNDER BANKRUPTCY RULE 2004, 

AUTHORIZING DISCOVERY PROGRAM WITH RESPECT TO CERTAIN 

CAUSES OF PUERTO RICO FINANCIAL CRISIS BEGINNING ON AUGUST 15, 2018 

 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 (Bankruptcy Case No. 17-BK-3283 (LTS)) (Last Four Digits of Federal Tax ID: 

3481), (ii) 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), (iii) Puerto Rico Highways and Transportation Authority (“HTA”) (Bankruptcy Case 

No. 17-BK- 3567 (LTS)) (Last Four Digits of Federal Tax ID: 3808), and (iv) Puerto Rico 

Sales Tax Financing Corporation (“COFINA”) (Bankruptcy Case No. 17-BK-3284 (LTS)) 

(Last Four Digits of Federal Tax ID: 8474); 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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TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT ..........................................................................2

BACKGROUND ............................................................................................5

ARGUMENT ................................................................................................8

I. THE INDEPENDENT INVESTIGATOR’S FINAL REPORT IS

EXPECTED BY JULY 31, 2018 ........................................................9

II. THE UCC HAS HAD EXTENSIVE VISIBILITY AND 

PARTICIPATION RIGHTS IN THE INVESTIGATION .........................11

III. THE INDEPENDENT INVESTIGATOR IS BEST SITUATED TO

CONDUCT A COST-EFFECTIVE, EFFICIENT AND THOROUGH

INVESTIGATION .......................................................................13

IV. THE RENEWED MOTION IS PREMATURE AT BEST .........................16

CONCLUSION .............................................................................................17

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TABLE OF AUTHORITIES

Page(s)

CASES

In re Countrywide Home Loans, Inc.,

384 B.R. 373 (W.D. Pa. 2008)...................................................................................................8

In re Millennium Lab Holdings, LLC,

562 B.R. 614 (Bankr. D. Del. 2016)..........................................................................................8

In re Texaco, Inc.,

79 B.R. 551 (Bankr. S.D.N.Y.1987)..........................................................................................8

Matter of Educators Grp. Health Tr.,

25 F.3d 1281 (5th Cir. 1994) ...................................................................................................16

Matter of S.I. Acquisition, Inc.,

817 F.2d 1142 (5th Cir.1987) ..................................................................................................16

STATUTES

48 U.S.C. §§ 2101–2241..................................................................................................................2

PROMESA § 104...........................................................................................................................15

PROMESA § 104(c)(1)..................................................................................................................12

PROMESA § 104(p)..................................................................................................................8, 15

PROMESA § 104(o)............................................................................................................6, 14, 15

PROMESA § 301(c)(7)..................................................................................................................14

PROMESA § 305.......................................................................................................................5, 16

PROMESA § 315(b)........................................................................................................................2

OTHER AUTHORITIES

Fed. R. Bankr. P. 2004.............................................................................................................. 8, 15

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To the Honorable United States Magistrate Judge Judith G. Dein:

The Commonwealth of Puerto Rico (the “Commonwealth”), the Puerto Rico Sales Tax 

Financing Corporation (“COFINA”), the Puerto Rico Highways and Transportation Authority 

(“HTA”), the Employees Retirement System of the Government of the Commonwealth of Puerto 

Rico (“ERS”), and the Puerto Rico Electric Power Authority (“PREPA,” and together with the 

Commonwealth, COFINA, and HTA, the “Debtors”), by and through the Financial Oversight 

and Management Board for Puerto Rico (the “Oversight Board”), as the Debtors’ representative 

pursuant to section 315(b) of the Puerto Rico Oversight, Management, and Economic Stability 

Act (“PROMESA”),2 respectfully submit this objection to the Renewed Motion of Creditors’ 

Committee Seeking Entry of Order, Under Bankruptcy Rule 2004, Authorizing Discovery 

Program With Respect to Certain Causes of Puerto Rico Financial Crisis Beginning on August 

15, 2018 [ECF. No. 3066] (the “Renewed Motion”) in which the Official Committee of 

Unsecured Creditors (the “UCC”) seeks to commence, by August 15, 2018 discovery of certain 

financial institutions (as defined in the Motion referenced below, the “Puerto Rico Financial 

Institutions”) as originally sought in the Motion of Official Committee of Unsecured Creditors 

for Order, Under Bankruptcy Rule 2004, Authorizing Discovery Program With Respect to 

Certain Causes of Puerto Rico Financial Crisis [Docket No. 706] (the “Motion”).3

PRELIMINARY STATEMENT

1. Through its Renewed Motion, the UCC seeks authorization now to embark on an 

extensive discovery program that would commence after the Independent Investigator (defined 

below) releases its final report (the “Final Report”), or on August 15, 2018, whichever comes 

 2 PROMESA has been codified in 48 U.S.C. §§ 2101–2241.

3 Capitalized terms used but not defined herein shall have the meanings given to them in the 

Motion.

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first. This renewed request is premature at best. The Independent Investigator’s investigation, 

which has made substantial progress in the six months since the Court denied the UCC’s initial 

Motion, is in its final stages. In light of the considerable financial burden a parallel investigation 

would have on the Commonwealth, among other things, the UCC has failed to show good cause 

why the Court should decide today whether the discovery program requested by the UCC is 

warranted in the future. The Court should deny the Renewed Motion so all parties can review 

the Independent Investigator’s Final Report, at which time each party can evaluate whether there 

is good cause for further discovery on this topic. 

2. First, the Independent Investigator’s Final Report is forthcoming. The 

Independent Investigator anticipates its Final Report will be published on or before August 15, 

2018, subject to adjustment in light of any issues related to confidentiality concerns and 

objections to production and interviews. Indeed, the Independent Investigator communicated 

this to counsel for the UCC on May 4, 2018. The Final Report will address the topics the UCC 

claims it needs to investigate itself, including an assessment of the implications of the alleged 

“revolving door” among GDB, Popular, and Santander, a review of retail selling practices, and 

an identification of potential claims against third parties and matters for regulatory 

attention. While the Independent Investigator anticipates the Final Report should satisfy the 

UCC’s concerns, if, after reviewing the Final Report, material open fact questions remain, then 

the UCC can submit a motion for discovery with a limited and targeted scope. With the benefit 

of the Final Report, the Court can better determine whether additional investigation is truly 

warranted.

3. Second, the UCC has failed to comply with the Court’s November 17, 2017 order 

denying its Motion (the “November Order”). ECF No. 1827. Despite entering into a 

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Cooperation Agreement (defined below) with the Independent Investigator four months after the 

Court ordered it to, the UCC infrequently has exercised its extensive rights of participation and 

review. The UCC’s Renewed Motion does not identify the “targeted discovery requests for 

information,” id., it submitted to the Independent Investigator, nor does the Renewed Motion 

acknowledge that, consistent with the November Order, the Independent Investigator in large 

part accepted and followed through on the UCC’s proposed requests to the Puerto Rico Financial 

Institutions, as this Court ordered. Contrary to the UCC’s mischaracterizations of the 

investigation, the Independent Investigator has been committed to a thorough, transparent

process in cooperation with the UCC, to the extent it can without compromising its investigation, 

as demonstrated below. 

4. Third, premature authorization of the UCC’s requested discovery program would 

be unduly burdensome to Puerto Rico. The UCC has had access to over 14,000 documents 

(hundreds of thousands of pages, including electronic communications) in a shared repository,

and is invited to participate in weekly consultations with and receive oral reports from the 

Independent Investigator. In addition, the UCC’s Renewed Motion fails to acknowledge that the 

Independent Investigator, consistent with the November Order, accepted and followed through 

on 22 of the UCC’s 24 proposed document requests to Popular and Santander. Despite this, the 

UCC now seeks to pursue a full-blown and duplicative discovery program identical in scope to 

the program in their original Motion, filed on July 21, 2017, and has made no effort to tailor its

proposed investigation in light of requests already propounded and evidence collected. This is 

unacceptable in light of both this Court’s prior order and the fact that the costs of such a fishing 

expedition would be borne by the people of Puerto Rico.

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5. Finally, the UCC’s stated purpose is to identify causes of action to be brought 

against third parties on behalf of the Debtors, presumably by the UCC itself, to “grow the pie.” 

Neither the UCC nor any other third party has any authority to pursue causes of action on behalf 

of the Debtors. That authority rests solely with the Oversight Board, unless it consents to pursuit 

of any action by others under PROMESA section 305. The Oversight Board has no intention of 

ceding that authority to the UCC, and certainly not before issuance of the Final Report, which 

will help inform the Oversight Board’s own views as to what actions should be pursued.

BACKGROUND

6. On September 1, 2017, the Oversight Board, acting by and through the Special 

Investigation Committee of the Oversight Board and pursuant to its powers under PROMESA, 

retained Kobre & Kim LLP (the “Independent Investigator”) to investigate the factors 

contributing to Puerto Rico’s fiscal crisis and to examine Puerto Rico’s debt and its debt 

issuance, including disclosure and selling practices related thereto. See Kobre & Kim LLP 

Engagement Letter, September 6, 2017, available at https://juntasupervision.pr.gov/wpcontent/uploads/wpfd/50/59dff8956bf6f.pdf. 

7. Since its retention, the Independent Investigator has received and reviewed 

document productions from dozens of separate entities, interviewed scores of witnesses, issued 

subpoenas where required to secure information,

4 and has been preparing its Final Report in 

 4 As noted in the Independent Investigator’s Second Interim Report, the “Investigation relies 

upon, and has been made possible by, the voluntary cooperation of over 100 witnesses and 

stakeholders—including former and current senior government officers, underwriters, rating 

agencies, outside professionals, and advisors—who have actively cooperated with us in order 

to conserve resources and avoid litigation over subpoenas, all with the goal of concluding this 

independent review of the facts to renew Puerto Rico’s access to the capital markets.”

Independent Investigator’s Second Interim Report, Renewed Motion, Ex. D. ¶ 2.

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tandem with those efforts—despite significant difficulties in coordinating its investigation in the 

aftermath of Hurricanes Irma and Maria. 

8. Because the Independent Investigator’s work obviated the need for the UCC’s 

duplicative inquiry, the Court, in its November Order, denied the UCC’s original Motion without 

prejudice. Rather, the Court directed the parties to cooperate by “work[ing] together to develop 

a protocol whereby the UCC is to have meaningful input into the investigation,” and directed the 

UCC “to be much more targeted in its requests.” Renewed Motion, Ex. C, 82:21-24. 

9. Notwithstanding the Court’s expectation that the parties would enter into a 

cooperation agreement “something like in the next week,” Renewed Motion, Ex. C, 73:6-8, the 

UCC spent four months negotiating a Confidentiality, Cooperation and Non-Disclosure 

Agreement (the “Cooperation Agreement”) with the Independent Investigator. The Cooperation 

Agreement, which provides the UCC with extensive rights to participate in and remain informed 

about the progress of the investigation, was not executed until March 5, 2018. Renewed Motion, 

Ex. F. The Cooperation Agreement largely mirrors the agreement between the Independent 

Investigator and the Official Committee of Retirees (“the Retiree Committee”), pursuant to 

which the Retiree Committee was also given extensive rights to participate in and remain 

informed about the progress of the investigation. The Independent Investigator and the Retiree 

Committee reached their agreement on November 3, 2017, after only a few weeks of 

negotiations and prior to being ordered to do so by this Court. 

10. Pursuant to its Cooperation Agreement with the UCC, the Independent

Investigator conducts weekly investigation update calls, during which it provides, inter alia, 

information regarding the witnesses to be interviewed the following week. Although the 

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Independent Investigator solicits input from the UCC during these weekly calls, the UCC has 

suggested only a handful of general questions—all of which have been posed as requested. 

11. On its weekly calls, the Independent Investigator has consulted with the UCC on 

areas of inquiry for upcoming interviews for all witnesses, not just those from Government 

Development Bank of Puerto Rico (“GDB”), Popular, and Santander. As an example, on May 

18, 2018, the Independent Investigator provided counsel to the UCC with the names of 18 

individuals from 11 of the investment banks and other entities that would be interviewed during 

the week of May 21, 2018, for the UCC’s input. The Independent Investigator took input from 

the UCC’s counsel on the proposed areas of inquiry and has and will continue to ask the 

questions that UCC’s counsel has posed.

12. The UCC’s Renewed Motion comes as an additional 29 witnesses are scheduled 

to be interviewed over the coming weeks, including individuals at all the investment banks that 

played significant roles in underwriting and placing the bond offerings that are the subject of the 

Independent Investigator’s work. The Independent Investigator has interviewed over 30 

witnesses who worked at GDB in management, finance, and in-house legal roles, and as 

members of the board of directors over the past 6 administrations. The Independent Investigator 

also has interviewed over 10 witnesses who work or worked at Popular and Santander, and is 

scheduled to interview an additional 8 witnesses from GDB, Popular, and Santander, as well as 

the Puerto Rico Ethics Office, in San Juan this week. Additionally, the Independent Investigator 

has interviewed multiple witnesses from the Puerto Rico Department of Treasury and each of the 

ratings agencies that covered Puerto Rico bond issuances, as well as 3 former governors. And by 

the end of this month, the Independent Investigator will have completed witness interviews of 

representatives from virtually all of the financial institutions that served as lead underwriters for 

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Puerto Rico debt issuances, as well as principal bond counsel for those issuances. The witnesses 

reflect a selection of personnel responsible for pricing, selling, and giving critical legal counsel 

about the bonds, as well as the government personnel who negotiated their terms. 

13. At the same time the Independent Investigator is taking witness interviews, the 

Independent Investigator is also moving forward with drafting the Final Report. As such, the 

Independent Investigator will be in a position to complete its Final Report within a reasonable 

time period after the conclusion of witness interviews.

14. After the investigation, the Oversight Board will make public its Final Report

pursuant to PROMESA § 104(p), which requires the Oversight Board to publish the findings of 

the investigations described in section 104(o). In contrast, findings of statutory committee 

investigations are not required to be publicized and virtually never are. Because the Independent 

Investigator occupies the unique role of conducting a statutorily-mandated independent 

investigation on behalf of an oversight board, as distinguished from that of a court-appointed 

examiner operating pursuant to a court order to find claims on behalf of certain interested parties, 

the Independent Investigator’s intention is to present the evidence uncovered through its 

investigation in a way that will be useful for all interested parties in assessing the viability of 

claims and available defenses.

ARGUMENT

15. As the party seeking to conduct a rule 2004 examination, the UCC has the burden 

of showing good cause for the examination it seeks. In re Millennium Lab Holdings II, LLC, 562 

B.R. 614, 627–28 (Bankr. D. Del. 2016). The level of good cause to be demonstrated increases 

based on the disruptiveness, cost, and intrusiveness involved in the examination. In re 

Countrywide Home Loans, Inc., 384 B.R. 373, 393 (W.D. Pa. 2008) (“the level of good cause 

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required . . . will vary depending on the potential intrusiveness involved.”); In re Texaco, Inc., 79 

B.R. 551, 556 (Bankr. S.D.N.Y.1987) (finding that Rule 2004 examinations “should not be so 

broad as to be more disruptive and costly to the debtor than beneficial to the creditor.”). Not 

only has the UCC failed to comply with the Court’s November Order regarding a renewed Rule 

2004 request, it cannot demonstrate good cause for authority to incur the cost of ramping up its 

own discovery on matters already covered by the Independent Investigator, at least not until the 

final result of the Independent Investigator’s work is published. 

I. The Independent Investigator’s Final Report Is Expected On or Before August 

15, 2018

16. The investigation has entered its final stages and the Final Report is forthcoming. 

The Independent Investigator’s drafting of the Final Report is, in fact, far along and has 

progressed in parallel with witness interviews. As the Independent Investigator has reported 

publicly and conveyed to the UCC on May 4, 2017, the Independent Investigator anticipates 

releasing its Final Report on or before August 15, 2018, subject to adjustment in light of any 

issues related to confidentiality concerns and objections to production and interviews. It is 

premature for the UCC to file its Renewed Motion now, when publication of the Final Report is 

approaching. 

17. In the six months since the Court denied the UCC’s Motion, the Independent 

Investigator has made significant progress in its investigation in an efficient and cost-effective 

manner and according to an ambitious timeline. In doing so, the Independent Investigator 

propounded all of its initial requests promptly upon identification of witnesses. As explained 

above, those requests have produced significant results: the Independent Investigator has 

obtained the voluntary cooperation of over 100 witnesses and stakeholders, many of whom have 

produced documents, and scores of whom have sat for interviews. 

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18. The UCC premises its Renewed Motion on the mischaracterization that the 

Independent Investigator has somehow “blown” a hard-and-fast deadline of March 20, 2018 for 

the completion of its Final Report. But no such firm deadline was ever established. Rather, the 

Independent Investigator’s First Interim Report states only that it “believe[d] a realistic time 

frame for the preparation of a final investigation report is 200 days from the [Independent 

Investigator’s] retention.” Renewed Motion, Ex. B, at ¶ 3 (emphasis added). The First Interim 

Report was clear, however, that that timeframe was “subject to adjustment if after ongoing due 

diligence, or in light of document-recovery issues that have arisen in the aftermath of Hurricanes 

Irma and Maria, a different time period appears to be more reasonable.” Id. As the Independent

Investigator noted at the outset, the “proposed 200-day timeframe [is] an ambitious one.” Id. 

The UCC’s apparent displeasure that the ambitious timeline was not achieved is unwarranted, 

particularly in light of the significant challenges that have arisen as a result of Puerto Rico’s 

ongoing hurricane recovery. 

19. The UCC also complains that the Oversight Board’s counsel committed that the 

investigation would be completed by April 2018 “at the latest.” Renewed Motion at ¶ 3. Not so. 

In fact, counsel for the Oversight Board signaled at the November 2017 hearing that the timeline 

for the investigation was subject to change, noting that the investigation could “go[] a little 

longer” than the 200-day initial timeframe. Renewed Motion, Ex. C, 60:21-24. 

20. The UCC has actually known for some time that the estimated 200-day time 

frame would be adjusted and has said nothing prior to filing the Renewed Motion. The 

Independent Investigator’s Second Interim Report, dated April 5, 2018, made clear that the 

estimated publication date for the final report was the “summer of 2018.” Renewed Motion, Ex. 

D, ¶ 6. Over a month and a half has passed since that Second Interim Report was released. 

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During that time, the UCC has never expressed concern over an anticipated publication date of 

the summer of 2018. And since counsel for the UCC participates in weekly update calls on the 

progress of the investigation, the UCC has had ample opportunity to express such concerns. 

II. The UCC Has Had Extensive Visibility and Participation Rights in the 

Investigation

21. The UCC complains that it may never receive “meaningful” discovery 

information as a result of the investigation. That is manifestly untrue. 

22. Under the Cooperation Agreement, the UCC enjoys ample opportunities to 

participate actively in the investigation:

a. Witness Interviews: The Independent Investigator must notify the UCC of any 

voluntary witness interviews and must consult with the UCC about areas of 

inquiry. Renewed Motion, Ex. F, at ¶ 5. 

With respect to interviews of the Santander entities, the Popular entities, and the 

GDB, or any of their current or former employees or representatives, the UCC has 

the right to consult with the Independent Investigator about areas of inquiry. 

Renewed Motion, Ex. F, at ¶ 5. To the extent these entities’ witnesses are 

deposed, the UCC also may request the right to attend and ask questions at such 

depositions. Id. at ¶ 6.

b. Document Requests: The UCC has access to a centralized document depository 

that gives it access to materials produced in response to a subpoena, as well as 

non-confidential materials that have been voluntarily produced. ECF 3066, Ex. F, 

at ¶ 3. At present, the depository contains over 14,000 documents.

The UCC has the right to propose document requests as to the Santander entities, 

the Popular entities, and the GDB. Renewed Motion, Ex. F, at ¶ 7. The 

Cooperation Agreement also provides that documents obtained via subpoena from 

the Santander entities and the Popular entities will be fully accessible to the UCC. 

As a result, the UCC has access to all documents of Popular and Santander that 

have been produced to the Independent Investigator. 

23. Mindful of the Court’s admonition that the parties cooperate in the investigation, 

as soon as the UCC executed the Cooperation Agreement, the Independent Investigator solicited 

input from the UCC and implemented that input in its investigation, and has continued to do so: 

a. Witness Interviews: The Independent Investigator has regularly provided the 

UCC with a schedule of the witnesses to be interviewed each week, along with 

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interviews, the UCC frequently has not asked the Independent Investigator to pursue additional 

areas of inquiry beyond those already identified. It can only be presumed that the UCC’s failure 

to suggest additional topics is because the UCC is satisfied with the areas that the Independent 

Investigator proposes to cover. 

25. Accordingly, under the Cooperation Agreement, the Independent Investigator has 

pursued many, if not all, of the topics of interest to the UCC, directing requests to the Santander 

entities and the Popular entities that are virtually identical to the UCC’s requests in the Renewed 

Motion (and in the case of GDB, as noted above, making requests that overlap with the topics 

covered in the UCC’s proposed request)7 ; specifically requesting the emails of 

from Santander; and pursuing any areas of inquiry recommended by 

the UCC. The Independent Investigator’s Final Report, coupled with the extensive discovery to 

which the UCC already has access, should therefore address many, if not all, of the UCC’s 

information requests, including with respect to actual and potential conflicts of interests 

surrounding the issuance of debt, selling practices with respect to debt, accounting and auditing 

practices, and structural political drivers of Puerto Rico’s debt. Authorizing the UCC today to 

open another investigation in the near future in order to re-tread these same issues would be an 

unnecessary and inappropriate drain on the Commonwealth’s scarce resources. 

III. The Independent Investigator Is Best Situated to Conduct a Cost-Effective, 

Efficient and Thorough Investigation 

26. Contrary to the UCC’s assertion in the Renewed Motion, the Oversight Board 

does not and has not “acknowledged the UCC could, and should be permitted to commence its 

own discovery program if it determined that the materials identified by the Independent 

Investigator were insufficient or incomplete.” Renewed Motion ¶ 17. Indeed, the very statement 

 

7 See note 6, supra. 

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of the Oversight Board the UCC cites in support belies this assertion, stating only that “if the 

UCC is not satisfied....they can come back here and renew their 2004 motion.” Renewed 

Motion ¶ 17 (emphasis in original), citing Ex. C, 60:10-14. Should the Court be inclined to 

entertain the UCC’s discovery request now or in the future, the Oversight Board maintains that 

it, and not the UCC, is the appropriate party to conduct any further investigation and is best 

situated to conduct a cost-effective and efficient investigation. 

27. First, as established in the Oversight Board’s objection to the Motion (ECF No. 

859), the Oversight Board, and not the UCC, is expressly equipped, authorized, and empowered 

by Congress to conduct an investigation into the causes of the Puerto Rico fiscal crisis, 

specifically including, without limitation, selling practices and conflicts of brokers, dealers, and 

investment advisors.8 This investigatory role is consistent with the fact that the Oversight Board 

was established by Congress to exercise the rights the Bankruptcy Code assigns to trustees. See 

PROMESA 301(c)(7) (defining the term “trustee,” when used in the Bankruptcy Code, as 

“Oversight Board” for purposes of Title III). By appointing the Special Investigation Committee 

and retaining the Independent Investigator, the Oversight Board has taken meaningful steps in 

carrying out its statutory responsibilities under PROMESA. The Oversight Board stands ready 

to conduct further investigation, if the Oversight Board determines such investigation is 

warranted. 

 8 PROMESA section 104(o) provides: 

INVESTIGATION OF DISCLOSURE AND SELLING PRACTICES.— The Oversight 

Board may investigate the disclosure and selling practices in connection with the 

purchase of bonds issued by a covered territory for or on behalf of any retail investors 

including any underrepresentation of risk for such investors and any relationships or 

conflicts of interest maintained by such broker, dealer, or investment adviser is as 

provided in applicable laws and regulations.

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28. Second, in entrusting the Oversight Board with its important investigatory role, 

Congress exclusively provided the Oversight Board with a number of tools to conduct such an 

investigation, including the power to obtain official data from federal authorities, obtain 

information from the Commonwealth and its instrumentalities, “hold hearings, . . . take 

testimony, and receive evidence as the Oversight Board considers appropriate,” issue subpoenas 

requiring the attendance and testimony of witnesses and the production of documents relating to 

any matter under investigation, and penalize and/or prosecute any Commonwealth officer or 

employee who provides false or misleading information. See PROMESA § 104. The 

Independent Investigator has been authorized by the Oversight Board to exercise these 

investigatory powers and has done so by issuing investigative subpoenas on the Santander and 

Popular entities – precisely the entities the UCC seeks to examine. Moreover, it has an 

investigatory infrastructure in place, including signed agreements with numerous parties in 

interest that would enable it to quickly explore further issues. The UCC, by contrast, would have 

to commence the process from step one. 

29. Third, an Oversight Board-led investigation better serves the public’s interest. 

Unlike a UCC investigation under Rule 2004, the Oversight Board’s broad investigatory 

mandate under PROMESA is not limited to causes of actions that it can assert in its capacity as 

“trustee.” To the extent the UCC seeks to use a Rule 2004 investigation to identify or attempt to 

assert bondholders’ or other creditors’ direct claims against third parties for misconduct in 

connection with the issuance of bond debt, the UCC does not have the authority to assert such 

claims. The Oversight Board, on the other hand, is expressly empowered to investigate claims 

“on behalf of retail investors” under PROMESA § 104(o). Upon concluding its investigation, 

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the Oversight Board is required by PROMESA section 104(p) to make its findings public. The 

UCC, by contrast, is under no such obligation.

30. Finally, even if a further investigation leads to the identification of claims or 

causes of action, such claims would be owned by the Debtors, not the UCC. Even if the UCC 

were to seek derivative standing to pursue such actions,9 the Court could not grant derivative 

standing without the Oversight Board’s consent under PROMESA section 305, which provides

only the Oversight Board can consent to any stay, order or decree of the Court that interferes 

with the power of the Commonwealth to exercise its political and governmental powers or any of 

its property or revenues. PROMESA § 305.

IV. The Renewed Motion Is Premature at Best

31. As the Court recognized at the November 15 hearing, “the 2004 [motion] is 

premature at this point. The independent investigator should be given the opportunity to conduct 

this investigation, and it’s not a joint investigation. It’s their investigation at this point, though 

with input from the UCC.” Renewed Motion, Ex. C, 72:21-73:4. The Court’s statement is even 

more compelling with respect to the Renewed Motion. 

32. As outlined above, rather than take advantage of its extensive participation and 

visibility rights per the terms of the Cooperation Agreement it negotiated, the UCC has renewed 

its request for a full-blown discovery program unaltered from what it requested ten months ago. 

Even at that stage, the requests were vastly overboard and unduly burdensome,

10 and would 

 9 It is well settled that causes of action are property of a debtor’s estate and the trustee has 

exclusive standing to assert such claims. See Matter of Educators Grp. Health Tr., 25 F.3d 

1281, 1284 (5th Cir. 1994) (citing Matter of S.I. Acquisition, Inc., 817 F.2d 1142, 1153-54 (5th 

Cir.1987)).

10 Illustrative examples of the overbreadth of the Committee’s discovery program include:

• Eleven years of all communications between (i) GDB and the Santander Entities and (ii) 

GDB and the Popular Entities. See Motion Ex. H, Request No. 14.

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likely necessitate the incurrence of millions of dollars of unnecessary professional fees while 

diverting the resources of the Commonwealth and its instrumentalities at a critical time. Such 

requests are especially inappropriate now that the Independent Investigator has itself obtained 

volumes of discovery materials and made significant materials available to the UCC. 

33. With the Final Report forthcoming, it is inefficient and unreasonable for the UCC 

to seek authorization to commence a duplicative examination from step one. The UCC already 

expressed a willingness to wait until after the Final Report is released to commence its discovery

(assuming the Court authorizes it). What it should do is wait until the release of the Final Report

and reassess at that time whether additional discovery is necessary. Until that time, if the UCC 

has concerns about the investigation or Final Report, it should work with the Independent 

Investigator within the investigatory framework that has been established and the Cooperation 

Agreement it spent months finalizing, to address them. 

CONCLUSION

For the foregoing reasons, the Debtors respectfully request that the Court deny the 

Renewed Motion. 

Dated: May 22, 2018

San Juan, Puerto Rico

Respectfully submitted,

/s/ Martin J. Bienenstock

Martin J. Bienenstock 

Paul V. Possinger 

Ehud Barak

Timothy W. Mungovan

 

• “All Documents or Communications concerning the risks of the purchase, sale, or 

holding of Commonwealth Municipal Bonds or Puerto Rico Bond Funds, whether by the 

GDB or by any other person, entity or financial institution (including, without limitation, 

Santander or Banco Popular).” Motion Ex. H, Request No. 11.

• “All Documents or Communications concerning COFINA and the Commonwealth

Constitutional Debt Limit.” Motion Ex. H, Request No. 3.

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Margaret A. Dale

Maja Zerjal 

(Admitted Pro Hac Vice)

PROSKAUER ROSE LLP

Eleven Times Square

New York, NY 10036

Tel: (212) 969-3000

Fax: (212) 969-2900

Attorneys for the Financial Oversight and 

Management Board as representative for the 

Debtors

/s/ Hermann D. Bauer 

Hermann D. Bauer

USDC No. 215205

O’NEILL & BORGES LLC

250 Muñoz Rivera Ave., Suite 800

San Juan, PR 00918-1813

Tel: (787) 764-8181

Fax: (787) 753-8944

Co-Attorneys for the Financial Oversight and 

Management Board as representative for the 

Debtors

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