Judge withholds ruling on $7 million payment sought for Bonista advisers
By The Star Staff
U.S. District Court Judge Laura Taylor Swain took under advisement whether she will allow Puerto Rico to pay about $7 million to Bonistas del Patio as she questioned the silence of the Financial Oversight and Management Board on the matter.
Swain also noted that the Fiscal Agency and Financial Advisory Authority (AAFAF by its Spanish initials) had not filed a motion taking a position on the matter despite writing a letter favoring the payment. AAFAF attorney Peter Friedman merely said they had no objection to the request.
As there was no document from the commonwealth authorizing the payment, oversight board lawyer Brian Rosen said the board has not taken a position on the matter and sought time to put its position in writing. The judge, who is overseeing Puerto Rico’s Title III and other bankruptcy cases, said she would give the board until Dec. 28.
Bonistas del Patio’s financial adviser Ducera Partners and the law firm Davis Polk have been struggling to be paid $5 million and $2 million for their role in reaching the 2018 debt agreement, in particular their contribution in obtaining a separation of the sales tax between the commonwealth and Puerto Rico Sales Tax Financing Corp., known as COFINA.
While other groups of lawyers and professionals are subject to the scrutiny of the fee examiner and are paid from the bankruptcy estate, Bonistas is a nonprofit group that represents local bondholders and is not a creditor. Because of that, the Unsecured Creditors Committee has objected to their advisers being paid.
Swain questioned Bonistas’ basis for seeking payment of their expenses under bankruptcy law. Bonistas asked for payment because of their advocacy work that enabled negotiations toward a settlement.
Davis Polk attorney Donald S. Bernstein told Swain the commonwealth invited them to take part in the negotiations and play a role, which led them to believe they would be paid. He said Bonistas represented three classes of bondholders and Puerto Rico taxpayers.
Meanwhile, Swain, through a Dec. 12 order, allowed bankruptcy professionals to receive $66.2 million in fees and expenses. Of the total amount approved, $64.3 million was for fees and the rest was for expenses.
O’Melveny & Myers, counsel for the AAFAF, received the lion’s share of the compensation with $38.3 million.