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By Email
Jose B. Carrion III
Chairman of Financial Oversight and Management Board
Gerardo Portela Franco
Executive Director
Autoridad de Asesoria Financiera y Agenda Fiscal de Puerto Rico
Re: Request For Meetings March 27th - March 31 st
Dear Chairman Carrion, Members of the Board, and Mr. Portela:
The Ad Hoc Group of GO Bondholders ("GO Group") requests that the Oversight
Board, the Commonwealth, and various other creditors groups (including the COFINA
bondholders) join the GO Group next week (Monday, March 27th through Friday March
31st) to commence negotiations on potential debt restructurings under Title VI of
PROMESA. As set forth below, all parties agree that time is of the essence, and we
should therefore use the limited time between now and May 1, 2017 to explore a
consensual resolution.
P A U L , W E I S S , R I F K I N D , W H A R T O N & G A R R I S O N LLP
On March 18, 2017, the Oversight Board moved before the First Circuit Court of
Appeals to stay the pending litigation in Lex Claims, LLC et al v. Alejandro Garcia
Padilla et al. No. 3:16-cv-02374 (D.P.R.). In seeking a stay, the Oversight Board argued
that it "has approximately 45 days left before the PROMESA stay will end and, absent a
Title III filing, the Commonwealth will then be inundated with creditor lawsuits. The
Oversight Board requests that it be given these six weeks to negotiate with the
Commonwealth and its creditors .. . ."1 The Board further stated that it would suffer
irreparable harm if ongoing litigation interfered with the negotiation process
contemplated by PROMESA.2
The First Circuit Court of Appeals agreed, stating that the Board's participation in
litigation "would take valuable time and resources away from the Board's crucial work of
negotiating voluntary resolutions between the Commonwealth and its creditors," and
cause "irreparable harm to the Oversight Board's PROMESA negotiations."3
The GO Group wholly agrees that all parties should responsibly use the period
between now and May 1, 2017 to seek a consensual resolution of outstanding issues. For
precisely that reason, we call upon the Oversight Board, the Commonwealth, and key
holders of COFINA bonds to meet as soon as possible with the GO Group for an
extended number of days to begin negotiating the terms of a potential resolution under
Title VI of PROMESA. We believe it is necessary to devote several days to this process
for there to be any chance that a transaction might be effectuated by May 1, 2017. We
therefore propose that such meetings commence from March 27th through March 31 st , but
are prepared to meet this week if the parties' schedules permit.
We are mindful that the Commonwealth has sought court-annexed mediation to
foster these negotiations, and that Judge Besosa has requested all parties to submit their
views on the appointment of a mediator by March 31, 2017.4 While a mediator might
ultimately prove necessary to advance negotiations, the parties cannot delay meaningful
negotiations until a mediator is appointed and fully up to speed on matters of such
complexity that the Board, Commonwealth, and creditors have had months (or years) to
understand. It is unrealistic to think that, prior to May 1, 2017, a mediator could be
selected, the parties could prepare mediation briefs, the mediator could have sufficient
time to review such briefs, and the parties could hold formal mediation sessions. Indeed,
each of these tasks would, as the Board suggests, distract from engaging in meaningful
negotiations.
Motion of Intervener-Appellant Financial Oversight and Management Board for Puerto Rico For a
Stay Pending Appeal at 3, Lex Claims, LLC et al. v. Alejandro Garcia Padilla et al. No. 17-1241 (1st
Cir.Mar. 18,2017).
Id. at 4.
Order of Court, March 20, 2017, Lex Claims, LLC et al. v. Alejandro Garcia Padilla et al, No.171241 (1st Cir).
Defendants' Motion For an Order Commencing Court-Annexed Mediation, Docket No. 242, Lex
Claims, LLC et al. v. Alejandro Garcia Padilla et al. No. 3:16-cv-02374 (D.P.R. Mar. 20, 2017);
Order, Docket No. 243, Lex Claims, LLC et al. v. Alejandro Garcia Padilla et al. No. 3:16-cv-02374
(D.P.R. Mar. 21, 2017).
PAUL, WEISS, RIPKIND. W H A R T O N & GARRISON LLP
Rather, all parties should commit as soon as possible to engage in negotiations so
we can quickly determine whether we can make meaningful progress. If progress is not
achievable, the parties may come to the conclusion that mediation is a suitable
alternative. But in the event progress is achievable, then parties will have saved
significant time and preserved the ability to implement a consensual restructuring before
May 1,2017.5
Please confirm as soon as possible, and no later than March 23, 2017, whether the
Oversight Board and the Commonwealth are willing to meet next week (or earlier) to
commence such negotiations. Concurrently with this letter, we are reaching out to other
creditor groups to determine their availability as well. We recognize that nondisclosure
agreements will need to be signed in advance of these meetings, and therefore request
that the Commonwealth promptly provide comments to the draft nondisclosure
agreement the GO Group provided on February 14, 2017.
Very truly yours,
Andrew Rosenberg
5
We take no position at this time on the Commonwealth's request for mediation. Instead, we simply ask
all parties not to delay negotiations that should start immediately while we await the resolution of that
request and the availability of a mediator if one is appointed.