Case: LTS Doc#:117-1 Filed:07/20/17 Entered:07/20/17 17:08:50 Exhibit 1 Page 1 of 67 EXHIBIT 1

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1 Exhibit 1 Page 1 of 67 EXHIBIT 1

2 Exhibit 1 Page 2 of 67 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO x In re: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, PROMESA Title III as representative of THE COMMONWEALTH OF PUERTO RICO, et al. Debtors x In re: THE FINANCIAL OVERSIGHT AND MANAGEMENT BOARD FOR PUERTO RICO, as representative of PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY ( HTA ), Debtor x PEAJE INVESTMENTS LLC, Plaintiff, -v- PUERTO RICO HIGHWAYS AND TRANSPORTATION AUTHORITY, et al. Defendants x No. 17 BK 3283-LTS (Jointly Administered) PROMESA Title III No. 17 BK 3567-LTS Adv. Proc. No LTS in 17 BK 3567-LTS Adv. Proc. No LTS in 17 BK 3283-LTS 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); and (ii) Puerto Rico Highways and Transportation Authority ( PRHTA or HTA ) (Bankruptcy Case No. 17 BK 3567) (Last Four Digits of Federal Tax ID: 3808).

3 Exhibit 1 Page 3 of 67 DEFENDANTS OPPOSITION TO PLANTIFF S MOTION FOR A PRELIMINARY INJUNCTION ii

4 Exhibit 1 Page 4 of 67 TABLE OF CONTENTS PRELIMINARY STATEMENT...1 BACKGROUND...6 I. THE STATE OF PUERTO RICO S ECONOMY...6 II. HTA S INTEGRATED TRANSPORTATION SYSTEM...7 III. THE ENABLING ACT AND THE 68 RESOLUTION...10 IV. PROMESA AND THE FINANCIAL OVERSIGHT MANAGEMENT BOARD...11 V. THE COMPLAINT AND THE PRELIMINARY INJUNCTION MOTION...12 ARGUMENT...13 I. PEAJE IS NOT LIKELY TO SUCCEED ON THE MERITS A. Under PROMESA 305, This Court Does Not Have Subject Matter Jurisdiction to Provide Peaje with the Injunctive Relief It Seeks Peaje s Request for an Injunction Requiring HTA to Turn Property or Revenue Over to Peaje Is Precluded by Peaje s Attempts to Evade 305 Should Be Rejected...17 a. Peaje May Not Evade the Effect of 305 by Relying On 11 U.S.C. 922(d)...17 b. Peaje s Tenth Amendment Argument Is Irrelevant c. HTA s Filing of This Title III Case Does Not Constitute Implied Consent to This Court s Jurisdiction to Issue the Injunctive Relief Sought by Peaje B. Peaje Cannot Obtain an Injunction Because It Cannot Establish It Is a Secured Claimholder The 68 Bonds Are Not Secured by a Statutory Lien on Toll Revenues a. The Law Governing Statutory Liens b. Peaje Does Not Have A Statutory Lien on Toll Revenues c. Defendants Have Never Conceded A Statutory Lien Exists iii

5 Exhibit 1 Page 5 of 67 d. Peaje Has No Lien or Security Interest in Moneys Held by HTA or Any Future Stream of Revenue Peaje Has Specifically Disclaimed A Consensual Lien II. PEAJE WILL NOT SUFFER IRREPARABLE HARM IF AN INJUNCTION DOES NOT ISSUE III. AN INJUNCTION WOULD GRIEVOUSLY HARM HTA AND THE PUBLIC, FAR OUTWEIGHING THE THREAT OF INJURY TO PEAJE IV. GRANTING THE INJUNCTION WOULD VIOLATE THE PUBLIC INTEREST...35 V. THE COURT SHOULD NOT ENJOIN A VALID EXERCISE OF THE POLICE POWER VI. PEAJE WOULD BE REQUIRED TO POST A BOND UNDER RULE VII. PEAJE IS NOT ENTITLED TO STAY RELIEF OR ADEQUATE PROTECTION Peaje Is Not Entitled to Stay Relief or Adequate Protection Because It Has No Lien Peaje s Interest in Collateral is Not Diminishing in Value Peaje s Expert Opines That Any Interest in Collateral Peaje May Have Is Adequately Protected by a Significant Equity Cushion Peaje Is Not Entitled to Relief from the Automatic Stay...47 a. The Automatic Stay Cannot Be Lifted, Because Peaje s Lien Is Subject to Significant Dispute b. Lifting the Automatic Stay Would Deny HTA the Chance to Adjust Its Debts CONCLUSION...49 iv

6 Exhibit 1 Page 6 of 67 TABLE OF AUTHORITIES Page(s) CASES Alliance Capital Mgmt. L.P. v. County of Orange (In re County of Orange), 189 B.R. 499 (C.D. Cal. 1995)...24 Armstrong v. Goyco, 29 F.2d 900 (1st Cir. 1928)...36 Baybank-Middlesex v. Ralar Distribs, Inc., 69 F.3d 1200 (1st Cir. 1995)...45 BedRoc Ltd., v. United States, 541 U.S. 176 (2004)...17, 18 Bluebird Partners, L.P. v. First Fid. Bank, N.A., 85 F.3d 970 (2d Cir. 1996)...41 Connecticut Nat l Bank v. Germain, 503 U.S. 249 (1992)...17 Crowley v. Local No. 82, Furniture & Piano Moving, Furniture Store Drivers, Helpers, Warehousemen, and Packers, 679 F.2d 978 (1st Cir. 1982), rev d on other grounds, 467 U.S. 526 (1984)...38, 39 Faitoute Iron & Steel Co. v. City of Asbury Park, N.J., 316 U.S. 502 (1942)...36 Fed. Nat l Mortgage Ass n v. Dacon Bolingbrook Assocs. Ltd. P ship, 153 B.R. 204 (N.D. Ill. 1993)...41, 44 First Nat l Bank of Colorado Springs v. Hamilton (In re Hamilton), 18 B.R. 868 (Bankr. D. Col. 1982)...28 First Nat l Bank of Denver v. Turley, 705 F.2d 1024 (8th Cir. 1983)...47 Francisco Sanchez v. Esso Standard Oil Co., 572 F.3d 1 (1st Cir. 2009)...38 v

7 Exhibit 1 Page 7 of 67 Frank s GMC Truck Ctr., Inc. v. General Motors Corp., 847 F.2d 100 (3d Cir. 1988)...31 Franklin California Tax-Free Tr. v. Puerto Rico, 805 F.3d 322 (1st Cir. 2015)...15 Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U.S. 1 (2000)...17 Home Bldg. & Loan Ass n v. Blaisdell, 290 U.S. 398 (1934)...37 Hughes Aircraft Co. v. Jacobson, 525 U. S. 432 (1999)...17 In re 499 W. Warren Street Assocs., Ltd., 142 B.R. 53 (Bankr. N.D.N.Y. 1992)...44 In re Ball, No , 2006 WL (Bankr. D. Utah. May 4, 2006)...23, 24 In re Birney, 200 F.3d 225 (4th Cir. 1999)...28 In re Briggs Transp. Co., 780 F.2d 1339 (8th Cir. 1985)...42 In re City of Detroit, 524 B.R. 147 (Bankr. E.D. Mich. 2014)...16 In re City of Detroit, 841 F.3d 684 (6th Cir. 2016)...15, 18, 21 In re City of Stockton, 478 B.R. 8 (Bankr. E.D. Cal. 2012)... passim In re City of Stockton, 486 B.R. 194 (Bankr. E.D. Cal. 2013)...15 In re City of Stockton, 526 B.R. 35 (Bankr. E.D. Cal. 2015)...23 In re Continental Airlines, Inc., 154 B.R. 176 (Bankr. D. Del. 1993)...41 In re County of Orange, 179 B.R. 185 (Bankr. C.D. Cal. 1995)...19 vi

8 Exhibit 1 Page 8 of 67 In re County of Orange, 179 B.R. 195 (Bankr. C.D. Cal. 1995)...15 In re Davenport, 34 B.R. 463 (Bankr. M.D. Fla. 1983)...47 In re DBSI, Inc., 432 B.R. 126 (Bankr. D. Del. 2010)...23 In re Dunes Casino Hotel, 69 B.R. 784 (Bankr. D. N.J. 1986)...46 In re Fortune Smooth (U.S.) Ltd., 1993 WL (Bankr. S.D.N.Y. July 6, 1993)...45 In re Garland Corp., 6 B.R. 456 (1st Cir. 1980)...40 In re Heath, 79 B.R. 616 (Bankr. E.D. Pa. 1987)...46 In re Heffernan Mem'l Hosp. Dist., 202 B.R. 147 (Bankr. S.D. Cal. 1996)...19 In re Hunt s Pier Assocs., 143 B.R. 36 (Bankr. E.D. Pa. 1992)...40, 47 In re Jefferson County, 474 B.R. 228 (Bankr. N.D. Ala. 2012)...19 In re Kiesewetter, 337 B.R. 75 (Bankr. W.D. Pa. 2006)...47 In re Las Vegas Monorail Co., 429 B.R. 317 (Bankr. D. Nev. 2010)...23, 24, 44 In re Lopez-Soto, 764 F.2d 23 (1st Cir. 1985)...40 In re McKillips, 81 B.R. 454 (Bankr. N.D. Ill. 1987)...45 In re Mount Carbon Metro. Dist., 242 B.R. 18 (Bankr. N.D. Cal. 1991)...16 In re Mullen, 172 B.R. 473 (Bankr. D. Mass. 1994)...41 vii

9 Exhibit 1 Page 9 of 67 In re New York City Off-Track Betting Corp., 434 B.R. 131 (Bankr. S.D.N.Y. 2010)...15, 22 In re Ralar Distribs., 166 B.R. 3 (Bankr. D. Mass. 1994)...44 In re Residential Capital, LLC, 501 B.R. 549 (Bankr. S.D.N.Y. 2013)...42 In re Rice, 82 B.R. 623 (Bankr. S.D. Ga. 1987)...40, 47 In re Richmond Unified Sch. Dist., 133 B.R. 221 (Bankr. N.D. Cal. 1991)...16 In re Soares, 107 F.3d 969 (1st Cir. 1997)...48 In re Stern, 44 B.R. 15 (Bankr. D. Mass. 1984)...23, 24 In re SW Boston Hotel Venture LLC, 449 B.R. 156 (Bankr. D. Mass. 2011)...42 In re SW Boston Hotel Venture, LLC, 748 F.3d 393 (1st Cir. 2014)...42 In re Valley Health Sys., 429 B.R. 692 (Bankr. C.D. Cal. 2010)...15 In re Winthrop Old Farm Nurseries, Inc., 50 F.3d 72 (1st Cir. 1995)...42 Iriarte v. United States, 157 F.2d 105 (1st Cir. 1946)...18 Longo En-Tech Puerto Rico, Inc. v. U.S. Envtl. Prot. Agency, 2017 WL (D.P.R. Mar. 6, 2017)...30 Micro Signal Research, Inc. v. Otus, 417 F.3d 28 (1st Cir. 2005)...31 Miller v. Schoene, 276 U.S. 272 (1928)...34, 37 Neang Chea Taing v. Napolitano, 567 F.3d 19 (1st Cir. 2009)...17 viii

10 Exhibit 1 Page 10 of 67 Northcross v. Bd. of Ed. of Memphis City Sch., 412 U.S. 427 (1973)...14 Peaje Inv. LLC v. Alejandro Garcia-Padilla, Civil No FAB, 2016 U.S. Dist. LEXIS (D.P.R. Nov. 2, 2016)...27 Peaje Investments LLC v. Alejandro Garcia-Padilla, 845 F.3d 505 (1st Cir. 2017)...27, 28, 45 Puerto Rico Hosp. Supply, Inc. v. Boston Sci. Corp., 426 F.3d 503 (1st Cir. 2005)...30, 31 Rodriguez v. Montalvo, 371 F. Supp. 2d 3 (D. Mass. 2005)...31 Rubin v. United States, 449 U.S. 424 (1981)...17 Ruiz v. Economics Lab., Inc., 274 F. Supp. 14 (D.P.R. 1967)...36 Sancho v. Bacardi Corp. of Am., 109 F.2d 57 (1st Cir. 1940)...36 Sataki v. Broad. Bd. of Governors, 733 F. Supp. 2d 22 (D.D.C. 2010)...30 Smith v. Nw. Mut. Life Ins. Co., No. 11-C-71, 2011 U.S. Dist. LEXIS (E.D. Wis. Sept. 13, 2011)...6 Total Petroleum Puerto Rico Corp. v. Quintana, No GAG, 2016 WL (D.P.R. Nov. 30, 2016)...39 United Parcel Service v. Flores Galarza, 210 F. Supp. 2d 33 (D.P.R. 2002)...31 United Savings Ass n of Texas v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365 (1988)...41 United States v. Gold (In re Avis), 178 F.3d 718 (4th Cir. 1999)...28 United States v. Lincoln Sav. Bank (In re Commercial Millwright Serv. Corp.), 245 B.R. 585 (Bankr. N.D. Iowa 1998)...28 ix

11 Exhibit 1 Page 11 of 67 Vaqueria Tres Monjitas, Inc. v. Comas, 980 F. Supp. 2d 65 (D.P.R. 2013)...6 Veix v. Sixth Ward Bldg. & Loan Ass n of Newark, 310 U.S. 32 (1940)...37 Verizon New England Inc. v. Maine Public Utilities Commission, 403 F. Supp. 2d 96 (D. Me. 2005)...31 Wal-Mart P.R., Inc. v. Zaragoza-Gomez, 834 F.3d 110 (1st Cir. 2016)...31 Wal-Mart Puerto Rico, Inc. v. Zaragoza-Gomez, 174 F. Supp. 3d 585, 592 (D.P.R. 2016)...6 Waldron v. George Weston Bakeries Inc., 570 F.3d 5 (1st Cir. 2009)...13 Watchtower Bible Tract Society of N.Y., Inc. v. Municipality of Aguada, 160 F. Supp. 3d 440 (D.P.R. 2016)...39 Westernbank P.R. v. Kachkar, Civil No, ADC, 2009 U.S. Dist. LEXIS (D.P.R. Sept. 1, 2009)...31 Winkelman v. CVS Caremark Corp., 827 F.3d 201 (1st Cir. 2016)...6 Young v Buena Vista Condos., 477 B.R. 594 (W.D. Pa. 2012)...22, 23, 24, 25 STATUTES 3A L.P.R.A. App. III 5...7, 26 3 L.P.R.A L.P.R.A , 26 9 L.P.R.A , 25 9 L.P.R.A L.P.R.A U.S.C passim 11 U.S.C x

12 Exhibit 1 Page 12 of U.S.C , 39, 40, U.S.C U.S.C U.S.C , U.S.C , U.S.C passim 11 U.S.C passim 11 U.S.C , 17, 29, U.S.C U.S.C , 21, 36, U.S.C , U.S.C , U.S.C passim 48 U.S.C Cal. Gov t Code Cal. Gov t Code Fed. R. Civ. P , 37, 38 Fed. R. Evid H.B. 2212, P.R. Act No , 27 HTA Resolution No , Adopted June 13, P.R. Act No , Puerto Rico Highways and Transportation Authority Enabling Act... passim P.R. CONST. art. II, P.R. CONST. art. III, U.S. CONST xi

13 Exhibit 1 Page 13 of 67 U.S. CONST. amend. X...21 OTHER AUTHORITIES 6 Collier on Bankruptcy (16th ed. 2017) Cong. Rec. H , H Business Workouts Manual 35:46 (2d ed )...19 Commonwealth Of Puerto Rico Financial Information and Operating Data Report (December 18, 2016)...27 Cong. Task Force on Econ. Growth In P.R., 114th Cong., Rep. to House & Senate (Dec. 20, 2016)...6, 7 D. Andrew Austin, Cong. Research Serv., R44095, Puerto Rico s Current Fiscal Challenges (2016)...6 David A. Skeel, Jr., What Is A Lien? Lessons from Municipal Bankruptcy, 2015 U. Ill. L. Rev. (2015)...19 Federal Practice and Procedure (2d ed. 2009)...38 H.R. Rep. No (1977)...23 xii

14 Exhibit 1 Page 14 of 67 To the Honorable United States District Court Judge Laura Taylor Swain: The Commonwealth of Puerto Rico (the Commonwealth ) and the Puerto Rico Highways & Transportation Authority ( HTA or PRHTA ) (collectively, the Debtors and each, a Debtor ), by and through the Financial Oversight and Management Board for Puerto Rico (the FOMB ), as the Debtors representative pursuant to section 315(b) of the Puerto Rico Oversight, Management, and Economic Stability Act ( PROMESA ), 1 the Puerto Rico Fiscal Agency and Financial Advisory Authority ( AAFAF ) and AAFAF s executive director the Hon. Gerardo Portela Franco (in his official capacity), the Hon. Ricardo Antonio Rosselló Nevares (in his official capacity), the Hon. Carlos Contreras Aponte (in his official capacity), the Hon. Raúl Maldonado Gautier (in his official capacity), and the Hon. José Iván Marrero Rosado (in his official capacity) (together, the Non-Debtor Defendants ) (with Debtors, collectively, Defendants ) respectfully submit this opposition to the Motion by Plaintiff Peaje Investment LLC ( Peaje ) for a preliminary injunction and for relief from the automatic stay or adequate protection (AP Dkt. 2; AP Dkt. 2) (the PI Motion ). PRELIMINARY STATEMENT Puerto Rico is in the midst of an unprecedented social and economic crisis. Extraordinary efforts are underway to implement a long-term plan for debt restructuring and economic development, including the eventual return to the public capital markets. In seeking a preliminary injunction, Peaje demands the immediate turnover of certain toll revenues collected by HTA now on three toll roads (PR-26, PR-52 and PR-53), as well as future toll revenues. HTA needs these toll revenues to keep Puerto Rico s transportation system operating and intact, which will preserve whatever rights, if any, Peaje may have in the toll revenues. 1 PROMESA has been codified in 48 U.S.C

15 Exhibit 1 Page 15 of 67 If the Court grants a preliminary injunction, then Puerto Rico and its people will suffer grave harm. Depriving HTA of the toll revenues essential to HTA s ability to fund its continued operations would devastate Puerto Rico s highways and transportation system (or would lead to the collapse of something else whose funding would have to be taken away). It would also paradoxically threaten the very revenue stream (tolls) Peaje asserts is collateral for its bonds. It would also exacerbate Puerto Rico s current financial crisis, undermine HTA and the Commonwealth s efforts to end their negative economic growth, and jeopardize Puerto Rico s economic recovery. Furthermore, granting the requested relief would threaten HTA s (and possibly the Commonwealth s) ability to successfully utilize the Title III process as these cases are still in their nascent stage, and deprive the Debtors of the benefit of PROMESA. These consequences are real and dire. The PI Motion should be denied because Peaje has failed to meet its burden of proof with respect to any of the predicates for injunctive relief. First, under PROMESA 305, 48 U.S.C. 2165, entitled Limitation on Jurisdiction and Powers of the Court, the Court lacks subject matter jurisdiction to interfere with the political or governmental powers of the debtor, its property or revenues, or its use or enjoyment of any income-producing property. That prohibition, which has been described as absolute, is fatal to the PI Motion because the entire point of the PI Motion is to interfere with HTA s use of its property or revenues. Peaje s arguments against the application of 305 range from plainly wrong (that the FOMB waived the protections of 305 simply by filing a Title III case, notwithstanding that Title III includes 305) to over-reaching (that 305 is trumped by 11 U.S.C. 922(d), which cannot be right, because 922(d) does not mandate turnover of any of a debtor s operating revenue it merely provides that a municipal debtor s bankruptcy filing does 2

16 Exhibit 1 Page 16 of 67 not stay the application of pledged special revenues in a manner consistent with 11 U.S.C. 928). Second, Peaje has not demonstrated a likelihood of success on the merits because its claims depend on the incorrect premise that Peaje is a secured claimholder. If Peaje is not secured, it has no cognizable rights to the toll revenues. Peaje asserts that HTA s Enabling Act, Act 74 enacted by the Legislature of Puerto Rico on June 23, 1965 (the Act ) and HTA Resolution 68-18, passed by HTA and adopted by the Secretary of Transportation and Public Works of the Commonwealth on June 13, 1968 (the 68 Resolution ) create a statutory lien in favor of Peaje on the toll revenues. Peaje is mistaken. Under 11 U.S.C. 101(53), a statutory lien exists only where a lien arises solely and automatically by force of a statute under specified conditions. Peaje s purported lien could not possibly arise solely and automatically from the Act. The Act contains permissive language and is not self-executing, as it merely permits HTA to create a non-statutory lien by contract. The Act only creates HTA as a public corporation and governmental instrumentality able to issue bonds that may contain security provisions that become part of HTA s contract with bondholders. In addition, the 68 Resolution cannot create a statutory lien because the 68 Resolution is not a statute. HTA is a public corporation that sits within Puerto Rico s executive branch and lacks legislative power to enact statutes. If the 68 Resolution gives rise to any contractual rights between HTA and Peaje, those rights do not create a statutory lien, nor do they extend to the toll revenues being collected by HTA now or future toll revenues. Without a statutory lien, Peaje is not a secured claimholder because it has expressly disclaimed any non-statutory liens. 3

17 Exhibit 1 Page 17 of 67 Third, Peaje has not met its burden of establishing that it would suffer irreparable injury without injunctive relief. As an unsecured claimholder, Peaje will not suffer any harm at all by waiting for compensation until a plan of adjustment is confirmed. Even if Peaje is a secured claimholder, the only claim it has is for the payment of money, and it necessarily has an adequate remedy in the form of monetary damages. Moreover, denying the PI Motion would benefit, rather than harm, Peaje by facilitating HTA s use of toll revenues to operate and maintain the toll roads today so that they will generate tolls tomorrow. Conversely, the requested injunction would be devastating to the public interest and cause grievous harm to the Commonwealth, HTA, and Puerto Rico s residents. Such harm far outweighs the alleged damage to Peaje if injunctive relief is denied. The accompanying expert declaration by macroeconomist Andrew Wolfe establishes that the adverse effect the requested injunctive relief would have on Puerto Rico s real economic growth could cause the Puerto Rico economy to descend into an economic spiral that would prevent Puerto Rico from achieving fiscal and debt sustainability, regaining access to the capital markets, and restructuring its debt. Ironically, the relief Peaje seeks would mean that its sole source of payment (the toll revenues) would dry up. In addition, the declarations of HTA s consultant and former executive director Sergio Gonzalez and transportation expert Tyler Duvall establish that the requested injunction would cause substantial harm to Puerto Rico s transportation system and, by extension, to the people of Puerto Rico. Toll revenues and electronic toll fines generated by the system represent a key means by which HTA maintains the safety and efficacy of Puerto Rico s network of roads (including its toll road, primary roads, secondary roads, and tertiary roads) and public transportation assets. 4

18 Exhibit 1 Page 18 of 67 Fourth, although Peaje s failure to meet its burden of proof necessitates denial of the PI Motion, if a preliminary injunction were issued, then under Fed. R. Civ. P. 65 Peaje should be required to post a very substantial bond, in an amount sufficient at minimum to cover the toll revenues deposited with the fiscal agent pending adjudication on the merits and to defray the damages that Defendants would suffer as a consequence of not having the use of such toll revenues in the interim. Finally, because Peaje has no lien, it is not entitled to adequate protection. Additionally, if Peaje is secured, it is adequately protected during the anticipated duration of this Title III case because using toll revenues to fund HTA s operations and maintain the toll roads will maintain whatever collateral value Peaje had on the petition date. Peaje would only be entitled to adequate protection for the decline in value of its collateral due to the automatic stay or use of its collateral during the life of the case. Peaje s proffered expert, Thomas Stanford, claims that Peaje has a large equity cushion. Defendants disagree with Stanford s analysis, which is based on a flawed model and erroneous assumptions. However, even under Stanford s flawed analysis, Peaje will continue to have this equity cushion for at least the next 24 months even if HTA uses every penny of toll revenues. Ultimately, what is clear is that HTA and the Commonwealth are solving problems, not creating them; their actions have not diminished whatever collateral value Peaje had on the petition date. 5

19 Exhibit 1 Page 19 of 67 BACKGROUND I. THE STATE OF PUERTO RICO S ECONOMY Puerto Rico is in a state of emergency. 2 Congress specifically found in Section 405(m) of PROMESA, 48 U.S.C. 2195, that Puerto Rico faces a fiscal emergency which has contributed to the accelerated outmigration of residents and businesses. As a result of the emergency, Puerto Rico cannot provide its citizens with effective services. Puerto Rico is insolvent and no longer able to pay its debts as they become due, Wal-Mart Puerto Rico, Inc. v. Zaragoza-Gomez, 174 F. Supp. 3d 585, 592 (D.P.R. 2016). 3 Since 2007, Puerto Rico s Gross National Product, or GNP, has contracted every year, declining by over 14% over the last decade. Task Force Report at 9; Declaration of Andrew Wolfe ( Wolfe Decl. ) 33. Total employment in Puerto Rico has plummeted from 1.25 million in 2007 to less than one million in 2016, with a current unemployment rate of approximately 2 The Court is aware of Puerto Rico s fiscal crisis. PROMESA 405(m) makes the fiscal emergency and the Commonwealth s inability to provide necessary services the premise of PROMESA. The Court may also take judicial notice of that unquestioned economic event along with related statistics and official data from publicly available sources, including facts reflected in the Fiscal Challenges Report and the 2016 PR Financial Statement. See, e.g., Vaqueria Tres Monjitas, Inc. v. Comas, 980 F. Supp. 2d 65, 76 n.10 (D.P.R. 2013) (taking judicial notice of unquestioned economic event and related statistics and official data). 3 See e.g., A. D. Austin, CONG. RESEARCH SERV., R44095, PUERTO RICO S CURRENT FISCAL CHALLENGES (2016) ( Fiscal Challenges Report ), and Report of Congressional Task Force On Economic Growth In Puerto Rico, dated December 20, 2016 ( Task Force Report ) (Request for Judicial Notice Ex. A and B). The Court may take judicial notice of the economic statistics cited in those reports under Fed. R. Evid. 201(b)(1) and 201(b)(2), as they are generally known within this Court s jurisdiction and can be readily determined from sources whose accuracy cannot reasonably be questioned. See, e.g., Winkelman v. CVS Caremark Corp., 827 F.3d 201, 208 (1st Cir. 2016) (affirming judicial notice of a Congressional Research Service report); Vaqueria, 980 F. Supp. at 75 n. 10 ( The Court can take judicial notice of an unquestioned economic event, which has been reprinted in internet articles describing or confirming the event, or other information, such as, published governmental statistics. ); Smith v. Nw. Mut. Life Ins. Co., No. 11-C-71, 2011 U.S. Dist. LEXIS , at *18 n.2 (E.D. Wis. Sept. 13, 2011) ( The Court may take judicial notice of historic economic data. ) 6

20 Exhibit 1 Page 20 of 67 12%. Task Force Report at 11; Wolfe Decl. 31. Approximately 60% of Puerto Rico s children live in poverty. Task Force Report at 10; Wolfe Decl. 35. The Commonwealth s population has declined over the past 15 years by approximately 10%, as people leave the Island for opportunities in the mainland United States and elsewhere. Id.at 13; Fiscal Challenges Report at 17. Worse still, the composition of the emigrating population is changing, with a larger number of higher-educated, professional-class residents leaving Puerto Rico than in the past, which causes an even greater negative impact on the Commonwealth s gross economic condition. Wolfe Decl. 30. Puerto Rico s finances are also in crisis. Fiscal Challenges Report at 1; Task Force Report at 9. Public-sector debt as a percentage of Puerto Rico s GNP has grown steadily since 2001, reaching 102% in 2013, Task Force Report at 12, amounting to $ billion, see Adversary Proceeding Case No LTS, Dkt. 1 ( Compl. ), Ex. D (Commonwealth Fiscal Plan) at 26. Compounding the emergency, Puerto Rico cannot refinance its significant debt, as it no longer has access to the capital markets. Fiscal Challenges Report at 3; Task Force Report at 20 ( The government of Puerto Rico currently lacks the ability to borrow money in the capital markets ). II. HTA S INTEGRATED TRANSPORTATION SYSTEM HTA is a public corporation and government instrumentality of the Commonwealth of Puerto Rico. 9 L.P.R.A HTA is part of Puerto Rico s executive branch of government: it is attached to the Department of Transportation and Public Works. 3A L.P.R.A. App. III 5 (Title III of the Laws of Puerto Rico is entitled Executive, as opposed to Title II, which is entitled Legislative ). 7

21 Exhibit 1 Page 21 of 67 As detailed in the declaration of Sergio Gonzalez, HTA is responsible for the construction, operation, and maintenance of Puerto Rico s essential transportation infrastructure, including its local roads, highways, and toll roads, bridges, and mass transit assets including both its bus and San Juan s heavy rail line, the Tren Urbano. Declaration of Sergio L. Gonzalez ( Gonzalez Decl. ) 13. HTA s road assets are comprised of 4,605 miles of roads: 185 miles of toll roads, 986 miles of non-toll primary roads, and 3,434 miles of secondary and tertiary roads. Id. 16. Of HTA s primary roads, six are toll roads. Id. These toll roads are PR-5, PR-20, PR- 22, PR-52, PT-53, and PR Id. HTA s road network needs substantial immediate and ongoing preservation, maintenance and repair, without which future direct and indirect costs will grow exponentially. Declaration of Tyler Duvall ( Duvall Decl. ) HTA s highway and transportation assets comprise a single integrated system in which each component part relies on the continued functioning and operation of the other component parts. Gonzalez Decl. 12, 14, 17; Duvall Decl. 34. This is clear from how HTA s system operates. For example, each of HTA s six toll roads is integrated with HTA s other road assets: every trip on a toll road must start and end on one of the primary, secondary, or tertiary roads over which HTA has responsibility. Gonzalez Decl. 17. This integrated road network is also intertwined with HTA s public transit assets, such as Tren Urbano. Gonzalez Decl. 12, Without the ability to access Tren Urbano by road, many more trips on HTA s road network would be needed, resulting in an increase in congestion and wear and tear on HTA s roads, ultimately leading to significantly increased operating and maintenance costs for the transportation network. Duvall Decl HTA entered into a private concession agreement in 2011, under which PR-5 and PR-22 are privately administered and the related toll revenues are not available to HTA fund its operations. Gonzalez Decl

22 Exhibit 1 Page 22 of 67 HTA s activities are financed by a number of revenue streams, including operating revenues, funds allocated to HTA by the Commonwealth, and federal funds provided by the Federal Transit Administration ( FTA ) and Federal Highway Administration ( FHWA ). 5 Gonzalez Decl. 12, 34, 37. Due to the fiscal crisis, the Commonwealth has much more limited funds available to allocate to HTA. Gonzalez Decl. 35. Beyond the limited funding available from the Commonwealth, HTA s funding for operations (as opposed to federal funding dedicated to toll road improvements or dedicated train funding) is highly dependent on its toll revenues. Duvall Decl. 36, Gonzalez Decl. 35, 49. This funding is woefully insufficient: The consequences of not funding critical operating expenses and necessary construction costs over the next 10 years are dire, and the increased risk of loss of lives due to the failure to properly maintain the road network. Id. 40. The loss of this source of operational funding for HTA operations the toll revenues would be catastrophic. Gonzalez Decl ; Wolfe Decl ; Duvall Decl. 22, 39, 40. HTA s federal funding from the FTA and the FHWA is expected to subsidize certain critical improvements on HTA s road network, including the creation of dynamic toll lanes, or DTLs (which are similar to EZ-Pass lanes), 5 HTA also borrowed nearly $2 billion from Puerto Rico s Government Development Bank, which it can longer do. 9

23 Exhibit 1 Page 23 of 67 which reduce traffic flow, enhance efficiency and reduce vehicle emissions, on PR-52 and PR- 18. Gonzalez Decl , 40. That federal funding, however, is precarious. Both FTA and FHWA impose stringent financial, regulatory, operational and other requirements on entities receiving their funds. Gonzalez Decl. 39, 51, 52. Failure to meet the requirements of either entity may result in the loss of all funding from that entity. Worse still, if HTA fails to comply with the FTA s requirements, the FTA may assert the claim that the Commonwealth must repay funds used for a project that the FTA asserts is noncompliant. To date, nearly $800 million of FTA funds have been invested in the Tren Urbano alone. Gonzalez Decl. 50. Adding more debt to HTA and Puerto Rico s already crippling burden is, of course, extraordinarily problematic. Id. III. THE ENABLING ACT AND THE 68 RESOLUTION The Act authorize[s] HTA to issue bonds to carry out its purposes. Act, Preamble. HTA was further enabled to [p]repare plans, designs, cost and construction estimates, extension, improvements, expansion or repair of any traffic or transportation facilities. Act, 4(e). Traffic and transportation facilities is defined broadly, to include [r]oads, railways, trains, buses,. Act, 4(c)(1). The Act also provides that: Any resolution or resolutions authorizing any bonds may contain provisions, which shall be a part of the contract with the holders of the bonds: (1) as to the disposition of the entire gross or net revenues and present or future income or other funds of the Authority, including the pledging of all or any part thereof to secure payment of the principal of and interest on the bond. Act, 12(e) (emphasis added). Nothing in the Act automatically creates a lien. On June 13, 1968, HTA promulgated the 68 Resolution, which authorized the issuance of bonds [f]or the purpose of providing funds for use by the Authority of the construction of 10

24 Exhibit 1 Page 24 of 67 Traffic Facilities. 68 Resolution, The 68 Resolution further created a special fund which was to consist of three separate accounts; these accounts were charged with payment of principal and interest on bonds issued pursuant to the 68 Resolution. 68 Resolution, 401. HTA covenant[ed] that it would make monthly deposits of revenues derived from tolls or other charges imposed by the Authority. 68 Resolution, 401. On February 26, 1998, HTA issued Resolution No (the 98 Resolution, Bobroff Decl. Ex. 4), which authorized the issuance of bonds for a number of purposes, including to meet the increasing demand for additional transportation facilities including projects for mass transit. 98 Resolution, Preamble. Between bonds issued pursuant to the 68 and 98 Resolutions, and a line of credit held by HTA at the Government Development Bank for Puerto Rico, HTA currently owes approximately $6.3 billion. Compl. Ex. B at 31. IV. PROMESA AND THE FINANCIAL OVERSIGHT MANAGEMENT BOARD In 2016, the U.S. Congress enacted PROMESA in an effort to stabilize Puerto Rico s economy by establishing oversight of the government s budget and fiscal policies and by providing a way for the Commonwealth to modify or restructure its debts. PROMESA 201(b)(2), 48 U.S.C PROMESA created the FOMB to help Puerto Rico achieve fiscal responsibility and access to the capital markets. PROMESA 101(a), 48 U.S.C. 2121; see also Compl PROMESA also granted extensive authority to the FOMB, including the power to approve and in its sole discretion certify proposed fiscal plans for both the 6 A copy of the 68 Resolution is submitted as Exhibit 3 to the Declaration of Bradley R. Bobroff in opposition to Plaintiff s motion ( Bobroff Decl. ), submitted herewith. Traffic Facilities was broadly defined to include roads, avenues, streets, thoroughfares, speedways, bridges, tunnels, channels, stations, terminals, and any other land or water facilities necessary or desirable in connection with the movement of persons, freight, vehicles or vessels. 68 Resolution,

25 Exhibit 1 Page 25 of 67 Commonwealth and any territorial instrumentalities of its choosing. Id. at 101(d)(1) 201(c)(3), (e). On April 28, 2017, the FOMB approved and certified a fiscal plan for the HTA, subject to certain amendments (the HTA Fiscal Plan ). See Compl. Ex. B. The HTA Fiscal Plan continues to be evaluated and reviewed by both HTA and the FOMB, and HTA and the FOMB anticipates certification of a revised Fiscal Plan imminently. As discussed below, HTA s use of the toll revenues is an essential component necessary to ensure preservation of the Commonwealth s transportation system. Using future toll revenues and fines to satisfy the claims of Peaje and other similarly-situated HTA creditors would reduce real economic growth below the threshold necessary for Puerto Rico to recover, resulting in a downward economic spiral where Puerto Rico would be unable to regain access to capital markets and attract the investment necessary for sustainable economic growth. Wolfe Decl , 39-52; Declaration of Jonathan I. Arnold ( Arnold Decl. ) Arnold Decl V. THE COMPLAINT AND THE PRELIMINARY INJUNCTION MOTION 7 On May 31, 2017, Peaje brought this adversary proceeding seeking declaratory and injunctive relief under the Bankruptcy Code and the U.S. Constitution. On the same day, Peaje filed a motion for a temporary restraining order and a preliminary injunction, as well as either relief from the bankruptcy stay or, in the alternative, adequate protection. Dkt The Complaint and PI Motion seek to force HTA to turn over to the fiscal agent the toll revenues that 7 Defendants reserve the right to submit evidentiary objections to Peaje s Verified Complaint, the Affidavit of Thomas Stanford, and any other evidentiary offering by Peaje, in advance of the August 8, 2017 hearing. 8 At the June 5, 2017 hearing, Peaje withdrew its request for a temporary restraining order and agreed not to assert that the automatic stay terminated before the adjudication of the preliminary injunction motion. June 5, 2017 Tr. (Bobroff Decl. Ex. 5) 55:16-18; Dkt. 47 at 2. 12

26 Exhibit 1 Page 26 of 67 are being collected by HTA now on three toll roads (PR-26, PR-52 and PR-53), but have not yet deposited with the Fiscal Agent, and future toll revenues, which Peaje asserts are special revenue under 11 U.S.C Compl. 10, 78, 80; PI Motion at 12-14, 16. Peaje does not, however, seek any relief at this time with respect to certain excise taxes and other funds previously made available to HTA by the Commonwealth, which Peaje asserts constitutes additional collateral for its bonds. Compl. 19. ARGUMENT To obtain an injunction forcing HTA to pay over toll revenues being collected now and future toll revenues, Peaje must establish (i) the likelihood that [it] will succeed on the merits; (ii) the possibility that, without an injunction, [it] will suffer irreparable harm; (iii) the balance of relevant hardships as between [Peaje and the Debtors]; and (iv) the effect of the court s ruling on the public interest. Waldron v. George Weston Bakeries Inc., 570 F.3d 5, 9 (1st Cir. 2009). Each factor weighs against Peaje. I. PEAJE IS NOT LIKELY TO SUCCEED ON THE MERITS. Peaje has not established a likelihood of success on the merits of any of its claims. In addition to the threshold jurisdictional impediment to granting Peaje s requested relief, two factors independently show Peaje has no likelihood of success. First, it lacks a valid statutory lien. Second, the use of the toll revenues to operate and maintain HTA s transportation system has the effect of preserving the value of Peaje s lien (if any) against future toll revenues. A. Under PROMESA 305, This Court Does Not Have Subject Matter Jurisdiction to Provide Peaje with the Injunctive Relief It Seeks. Peaje cannot establish a likelihood of success on the merits because PROMESA 305, 48 U.S.C ( 305 ) deprives this Court of subject matter jurisdiction to issue an 13

27 Exhibit 1 Page 27 of 67 injunction requiring HTA to deposit toll revenues with the Fiscal Agent because they are revenues or property of the debtor with which the Court may not interfere. Entitled Limitation on Jurisdiction and Powers of the Court, 305 provides that: Subject to the limitations set forth in titles I and II of this Act, notwithstanding any power of the court, unless the Oversight Board consents or the plan so provides, the court may not, by any stay, order, or decree, in the case or otherwise, interfere with (1) any of the political or governmental powers of the debtor; (2) any of the property or revenues of the debtor; or (3) the use or enjoyment by the debtor of any income-producing property. 48 U.S.C As applied here, 305 deprives this Court of subject matter jurisdiction because granting Peaje the relief it seeks necessarily would interfere with HTA s property or revenues, and the FOMB does not consent to such relief. 1. Peaje s Request for an Injunction Requiring HTA to Turn Property or Revenue Over to Peaje Is Precluded by 305. Courts have repeatedly held that 11 U.S.C 904 (on which 305 is modeled) deprives a court of the power to order a municipal debtor to turn property or revenues over to a creditor during the pendency of a Chapter 9 proceeding absent the debtor s express consent. United States Bankruptcy Judge Christopher M. Klein s comprehensive analysis of 904 s broad sweep in In re City of Stockton, 478 B.R. 8 (Bankr. E.D. Cal. 2012), is particularly instructive. 9 Given the near-identical language of 305 and 904, it should be presumed that Congress intended 305 to operate in the same manner as 11 U.S.C Northcross v. Bd. of Ed. of Memphis City Sch., 412 U.S. 427, 428 (1973) ( The similarity of language in [the statutes] is, of course, a strong indication that the two statutes should be interpreted pari passu. ). 14

28 Exhibit 1 Page 28 of 67 Stockton, California filed for Chapter 9 bankruptcy protection in To balance its budget, the Stockton city council imposed significant cost cutting measures that included a unilateral reduction in retiree health benefits. City of Stockton, 478 B.R. at 9. Retired city employees moved for a preliminary injunction prohibiting Stockton from implementing the reduction. The Stockton court found that it lacked jurisdiction to grant the requested injunction because it would necessarily require the court to interfere with the debtor s property or revenues and therefore was precluded by 904. Id. at As Judge Klein explained: [Section] 904 performs the role of the clean-up hitter in baseball. Its preambular language [n]otwithstanding any power of the court,... the court may not, by any stay, order, or decree, in the case or otherwise... is so comprehensive that it can only mean that a federal court can use no tool in its toolkit no inherent authority power, no implied equitable power, no Bankruptcy Code 105 power, no writ, no stay, no order to interfere with a municipality regarding political or governmental powers, property or revenues, or use or enjoyment of incomeproducing property. 11 U.S.C As a practical matter, the 904 restriction functions as an anti-injunction statute and more. Id. at 20. (emphasis added). Similarly, in In re City of Detroit, 841 F.3d 684, 696 (6th Cir. 2016), the Sixth Circuit affirmed the lower court s holding that, under 904, the court lacked jurisdiction to order injunctive and declaratory relief directing Detroit not to terminate residential customers water service for non-payment because such an order would necessarily interfere with [the] city s 10 The Stockton court also rejected the retirees argument which mirrors one of Peaje s arguments that the requested injunctive relief would be an innocuous preservation of the status quo that would not directly interfere with City property or revenues, and would not indirectly interfere with revenues, because the retirees rights to the health benefit is fixed and immutable. Id. at 21. The court explained, [i]t is impossible to envision how granting the plaintiffs prayer for an order compelling the City to maintain the Retiree Health Benefit and to pay attorney s fees, would not require the payment of money from the City s property or revenues. In fact, payment would be required. It follows that the relief sought is barred by 904(2) as an interference with the City s property or revenues. Id. 15

29 Exhibit 1 Page 29 of 67 governmental powers, its property and revenues, as well as its use and enjoyment of incomeproducing property. Id. at Section 904 s limitation on a court s jurisdiction has come to be described as absolute. City of Stockton, 478 B.R. at 17 (internal citations omitted); see also, Franklin California Tax-Free Tr. v. Puerto Rico, 805 F.3d 322, 342 (1st Cir. 2015); In re New York City Off-Track Betting Corp., 434 B.R. 131, 140 (Bankr. S.D.N.Y. 2010) ( Section 904 s command is clear. A bankruptcy court may not interfere with a chapter 9 debtor s political or governmental powers, or the use of the debtor s property, without the debtor s consent. ). The rationale for the absolute limitation that 904 imposes on a court s jurisdiction in a municipal bankruptcy is equally applicable to the restructuring of a covered territorial instrumentality like HTA. The primary purpose of debt restructure for a municipality is not future profit, but rather continued provision of public services. In re City of Detroit, 524 B.R. 147, 248 (Bankr. E.D. Mich. 2014) (quoting In re Mount Carbon Metro. Dist., 242 B.R. 18, 32, 34 (Bankr. D. Colo. 1999)); In re Richmond Unified Sch. Dist., 133 B.R. 221, 225 (Bankr. N.D. Cal. 1991) ( Chapter 9 does not attempt to balance the rights of the debtor and its creditors, but rather, to meet the special needs of a municipal debtor. ). Moreover, as explained more fully below, the FOMB s decision to apply HTA s toll revenues to transportation system expenses to ensure HTA s continued operations and a 11 See also In re City of Stockton, 486 B.R. 194, 198 (Bankr. E.D. Cal. 2013) (holding that the Chapter 9 municipal debtor was not required to move for court approval of a settlement because, under 904, the court could not prevent the debtor from spending its money for any reason, even foolishly or in a manner that disadvantages other creditors, unless the municipality consents to such judicial oversight. ); In re County of Orange, 179 B.R. 195, (Bankr. C.D. Cal. 1995) (finding that ordering the interim payment of professional fees would violate 904); In re Valley Health Sys., 429 B.R. 692, 714 (Bankr. C.D. Cal. 2010) (finding that by virtue of 904, a municipal debtor retains title to, possession of, and complete control over its property and its operations, and is not restricted in its ability to sell, use, or lease its property ). 16

30 Exhibit 1 Page 30 of 67 functioning, safe transportation infrastructure for the citizens of Puerto Rico was unquestionably a valid exercise of the Commonwealth s Police Power that is protected from interference in this Title III case by 305. As applied here 305 prevents the Court from interfering with HTA s use of the toll revenues, and thus, Peaje s requested relief must be denied. 2. Peaje s Attempts to Evade 305 Should Be Rejected. Peaje advances a series of flawed arguments to evade the absolute limitations imposed by 305. Each fails. a. Peaje May Not Evade the Effect of 305 by Relying On 11 U.S.C. 922(d). Peaje s argument that 305 is a general statute that is abrogated or governed by a more specific statute, 11 U.S.C. 922(d) ( 922(d) ), fails for a number of reasons. First, Peaje cannot rely on 922(d). Section 922(d) provides for a limited stay of application of pledged special revenue in a manner consistent with 11 U.S.C Section 928, in turn, refers to revenue pledged subject to any security agreement entered into by the debtor before the commencement of the case. As described in Point II(b) infra, Peaje disclaims that any security agreement exists between it and the Debtor. As a result, 922(d) cannot be invoked here to override 305. Second, Peaje s argument ignores the preeminent canon of statutory interpretation that requires this Court to presume that [the] legislature says in a statute what it means and means in a statute what it says there. BedRoc Ltd., v. United States, 541 U.S. 176, 183 (2004); Connecticut Nat l Bank v. Germain, 503 U.S. 249, (1992) (quoting Rubin v. United 12 As Peaje notes (PI Motion at 6 n.5), 922(d) refers to 927, but this is a scrivener s error and 928 was clearly intended. 17

31 Exhibit 1 Page 31 of 67 States, 449 U.S. 424, 430 (1981)). Section 305 unambiguously prevents a court from interference with a debtor s right to use or enjoy revenue or property notwithstanding any power of the court. Granting relief based on 922(d) would be relying on the power of the court, and is therefore proscribed. A court s inquiry begins with the statutory text, and ends there as well. Id. BedRoc Ltd., 541 U.S. at The language of 305 is nearly identical to the language of 904 that previously has been held to be straightforward and unambiguous. City of Detroit, 841 F.3d at 696. Applying the preeminent canon of statutory interpretation, this Court s inquiry should begin with the statutory text, and end there as well. 541 U.S. at 183. Third, Peaje ignores a corollary rule of statutory interpretation: whether specific statutory language may be given precedence over more general statutory language only comes into play if there are two conflicting statutes on the same subject. Iriarte v. United States, 157 F.2d 105, 108 (1st Cir. 1946) ( [T]he rule applies that when there are two conflicting statutes upon the same subject, one general and the other specific. ). Assuming 922(d) can even be invoked by Peaje, it is not on the same subject as 305, and the two statutes do not conflict with each other. Section 305 bars the Court from interfering with HTA s revenues without the FOMB s consent, while 922(d) provides that the automatic stay does not bar the FOMB from consenting to use property to make payments to certain secured creditors that would otherwise be barred by the automatic stay. Peaje pretends that 922(d) is a turnover statute. It is not. Congress knows how to command a turnover. See 11 U.S.C Section 922(d) addresses whether the filing of a petition automatically stays 13 Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U.S. 1, 6 (2000); Hughes Aircraft Co. v. Jacobson, 525 U. S. 432, 438 (1999); Connecticut Nat l Bank v. Germain, 503 U.S. 249, 254 (1992); see also, Neang Chea Taing v. Napolitano, 567 F.3d 19, 23 (1st Cir. 2009) ( If the statutory text is plain and unambiguous, the court must apply the statute according to its terms. ). 18

32 Exhibit 1 Page 32 of 67 payment of special revenue in a manner consistent with section [928] to payment of indebtedness secured by such revenues. Section 922(d) is a limited exception to the automatic stay that permits a debtor to pay a creditor during the pendency of the bankruptcy case; 922(d) does not mandate such payments. 14 Moreover, even if 922(d) could be interpreted to compel turnover, it would be limited to the moneys deposited with the Fiscal Agent for the reasons set forth in section I.B.1.b, infra. 15 Fourth, Peaje improperly relies on dicta in County of Orange, 179 B.R. 185 (Bankr. C.D. Cal. 1995) a case that did not address the application of 922 for the erroneous proposition 14 As stated in Collier s: [B]ecause section 922(d) is limited to an exception from the automatic stay, the provision does not suggest that its language compels payment of special revenues in the possession of the municipality. The legislative history of section 922(d), the use of the word pledged and not lien in section 922(d) and the limitations imposed by sections 903 and 904 suggest that section 922(d) is also not a statutory authorization for the court, at the request of a party in interest such as a secured creditor or indenture trustee, to require the debtor to pay special revenues it collects during the chapter 9 case. 6 Collier on Bankruptcy [2] (16th ed. 2017); see also Business Workouts Manual 35:46 (November 2016) ( While this provision [922] permits application of such payments, it does not go as far as mandating that such payments be made.... As the special revenues are received, the automatic stay will not preclude application of the payments to the bondholders. The bondholders cannot compel the municipality to make such payments. ). 15 The authorities cited by Peaje (PI Motion at 15-16) do not support its position that 922(d) compels or mandates turnover of special revenue funds. In In re Heffernan Mem'l Hosp. Dist., 202 B.R. 147, 149 (Bankr. S.D. Cal. 1996), the Court generally discusses the 1988 Amendments to the Bankruptcy Code but makes no mention of 922(d), nor is there any discussion of whether 922(d) compels the debtor to turnover special revenue funds; instead, the sole issue in that case was whether certain sales tax revenues constituted special revenues under 902, not whether such revenues had to be paid over under 922(d). The language Peaje cites from In re Jefferson County, 474 B.R. 228, 236 (Bankr. N.D. Ala. 2012) is, by Peaje s own account (PI Motion at 15), dictum. Further, Peaje s citation to David A. Skeel, Jr., What Is A Lien? Lessons from Municipal Bankruptcy, 2015 U. Ill. L. Rev. 675, 685 (2015), is puzzling because the article does not discuss or mention 922(d) at all. Instead, the portion of this article cited by Peaje merely compares special revenue bonds to general obligation bonds, noting that, generally, special revenue bonds are secured by a lien whereas general obligation bonds are not, since they are secured only by a municipality s full faith and credit commitment, which does not by itself create a lien. Id. at