Bonistas del Patio doubles down on demand that advisers be paid $7 million in fees
By The Star Staff
Bonistas del Patio, or Backyard Bondholders, a group that represented Puerto Rico bondholders in bankruptcy negotiations, is opposing a Financial Oversight and Management Board request that would prevent the group’s advisers from receiving $7 million in professional fees.
Bonistas has been seeking payment citing their contributions to helping reach an agreement that led to the Puerto Rico Sales Tax Financing Corp. (COFINA by its Spanish acronym) debt adjustment plan and the commonwealth debt adjustment plan.
Davis Polk is seeking $2 million in legal fees and Ducera Partners $5 million in financial advising fees for their work with Bonistas to help forge an agreement between sales tax and general obligation bondholders.
The bills from Bonistas’ professionals were not analyzed by the fee examiner as happened with the other professionals working on the island’s bankruptcy. U.S. District Court Judge Laura Taylor Swain, who oversees Puerto Rico’s Title III bankruptcy cases, asked the oversight board to take a stance on Bonistas pay at a Dec. 14 omnibus hearing. The board objected to the payment in a motion last week for the first time.
Bonistas said that regardless of whether the commonwealth by its conduct has previously bound itself to pay the professional expenses of Bonistas, those expenses should be allowed by the court under the Bankruptcy Code on account of the substantial contributions made by Bonistas to the Title III cases, and accordingly the commonwealth should be required to pay such expenses.
The organization said the claims by the oversight board that Bonistas didn’t make a substantial contribution “cannot be explained.”
“It is one thing to say the Bonistas Expenses should be disallowed even if Bonistas made substantial contributions to the cases; it is another to deny that Bonistas made such contributions, flying in the face of the Oversight Board’s own clear and repeated statements to the contrary at the time those contributions were made,” Bonistas argued.
So compelling was Bonistas’ role in helping forge an agreement that “the order confirming the COFINA Plan cited the involvement of Bonistas advocating for the interests of Puerto Rico resident bondholders” as a reason that “all major Classes of Claims were represented in [the] Mediation,” the organization argued. In addition, “the Oversight Board pressed Bonistas to publicly support the COFINA Plan, called upon Bonistas to take actions to encourage local bondholders to support the plan, and asked Bonistas to assist the Oversight Board in locating local bondholders to articulate their support for the plan at the COFINA confirmation hearing,” Bonistas asserted.
In the bankruptcy process in Puerto Rico, professionals hired by the different creditor groups are being paid by the bankruptcy estate after their bills are examined by the fee examiner. Bonistas was a nonprofit group that represented local bondholders, but it is not a creditor itself.