0001752724-21-267392.txt : 20211210 0001752724-21-267392.hdr.sgml : 20211210 20211210171918 ACCESSION NUMBER: 0001752724-21-267392 CONFORMED SUBMISSION TYPE: N-CEN PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20210930 FILED AS OF DATE: 20211210 DATE AS OF CHANGE: 20211210 EFFECTIVENESS DATE: 20211210 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc. CENTRAL INDEX KEY: 0001847302 IRS NUMBER: 660635925 STATE OF INCORPORATION: PR FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CEN SEC ACT: 1940 Act SEC FILE NUMBER: 811-23681 FILM NUMBER: 211486310 BUSINESS ADDRESS: STREET 1: 250 MUNOZ RIVERA STREET 2: TENTH FLOOR CITY: SAN JUAN STATE: PR ZIP: 00918 BUSINESS PHONE: 7877733888 MAIL ADDRESS: STREET 1: 250 MUNOZ RIVERA STREET 2: TENTH FLOOR CITY: SAN JUAN STATE: PR ZIP: 00918 FORMER COMPANY: FORMER CONFORMED NAME: Puerto Rico Fixed Income Fund II, Inc. DATE OF NAME CHANGE: 20210222 N-CEN 1 primary_doc.xml X0404 N-CEN LIVE 0001847302 XXXXXXXX 811-23681 false false false N-2 Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc. 811-23681 0001847302 549300H653Q0QFWQ2W25 250 MUNOZ RIVERA TENTH FLOOR SAN JUAN 00918 PR 787-250-3600 UBS Trust Company of Puerto Rico 250 Munoz Rivera 10th Floor San Juan PR 00918 787-250-3600 Records related to advisory, transfer agency, custody and administrative services JPMorgan Chase Bank, National Association 4 Chase Metrotech Center 6th Floor Brooklyn 11245 N-A Records related to custody and accounting services Y N N-2 N Carlos Nido N/A N Vicente Leon N/A N Joaquin Villamil N/A N Clotilde Perez N/A N Agustin Cabrer-Roig N/A N Luis M. Pellot-Gonzalez N/A N Carlos V. Ubinas 001985568 Y Luz N. Colon 002940264 1000 Harbor Boulevard 8th floor Weehawken 07086 XXXXXX N N N N N N Ernst & Young LLP 42 00000000000000000000 N N N N N N Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc. 549300H653Q0QFWQ2W25 Y 0 0 0 N/A Y N N N N/A N/A N/A Rule 32a-4 (17 CFR 270.32a-4) Y Y N N UBS Trust Company of Puerto Rico 801-120846 000313696 254900WP0P3ARLILZA18 PR N UBS Trust Company of Puerto Rico N/A 254900WP0P3ARLILZA18 PR Y N N ICE Data Services, Inc. 13-3668779 Tax ID N IHS Markit Ltd. 549300HLPTRASHS0E726 GB N N JPMorgan Chase Bank, National Association 7H6GLXDRUGQFU57RNE97 N N Bank - section 17(f)(1) (15 U.S.C. 80a-17(f)(1)) UBS Trust Company of Puerto Rico 254900WP0P3ARLILZA18 PR Y Y Self - rule 17f-2 (17 CFR 270.17f-2) N UBS Trust Company of Puerto Rico 254900WP0P3ARLILZA18 PR Y N N UBS Trust Company of Puerto Rico 254900WP0P3ARLILZA18 PR Y N N 0.00000000 Amherst Pierpont Securities LLC 8-68282 000150696 549300LGG2RLWD21SU97 99450000.00000000 99450000.00000000 N 72818191.77000000 Common stock Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc. N N Common stock N N N 0.83000000 0.98000000 1.46000000 2.31000000 true true true true INTERNAL CONTROL RPT 2 NCEN_811-23681_60463295_0921.htm icncentax-freefixedincomefun.htm - Generated by SEC Publisher for SEC Filing

Report of Independent Registered Public Accounting Firm

 

 

To the Shareholders and Board of Directors of

Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.

 

In planning and performing our audit of the financial statements of Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc. (formerly known as Puerto Rico Fixed Income Fund II, Inc.) (the Company) as of and for the year ended September 30, 2021, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), we considered the Company’s internal control over financial reporting, including controls over safeguarding securities, as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements and to comply with the requirements of Form N-CEN, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

The management of the Company is responsible for establishing and maintaining effective internal control over financial reporting. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of controls. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of a company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect

misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

 

A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

Our consideration of the Company’s internal control over financial reporting was for the limited purpose described in the first paragraph and would not necessarily disclose all deficiencies in internal control that might be material weaknesses under standards established by the PCAOB. However, we noted no deficiencies in the Company’s internal control over financial reporting and its operation, including controls over safeguarding securities, that we consider to be a material weakness as defined above as of September 30, 2021.

 

This report is intended solely for the information and use of management and Board of Directors of Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc. and the Securities and Exchange Commission and is not intended to be and should not be used by anyone other than these specified parties.

 

 

/s/ Ernst & Young LLP

 

New York, New York

November 29, 2021

 LEGAL PROCEEDINGS 3 NCEN_811-23681_24625328_0921.htm g1ai-pendinglitigation.htm - Generated by SEC Publisher for SEC Filing

List of pending litigation of UBS Funds as of December 9, 2021 which are: (1) any bankruptcy, receivership or similar proceeding with respect to the Fund or any of its significant subsidiaries; (2) any proceeding to which any director, officer or other affiliated person of the Fund is a party adverse to the Fund or any of its subsidiaries; and (3) any proceeding involving the revocation or suspension of the right of the Registrant to sell securities:

                Fund                      Description         Parties

                Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.

 

                Commonwealth Court

 

Case No.

KAC2014-0072 (505)

                Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.

                RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), The Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213: 

                                                                                                                        

 

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.

                 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

 

                                Adversary Proceedings

17-0219 and 17-0220     

Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.  

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants

 

 

                                Adversary Proceeding

19-00359

Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.            

The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds.         The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                Tax-Free Fund II for Puerto Rico Residents, Inc.   Commonwealth Court

Case No.

KAC2014-0072 (505)

                Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.

 

RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board  representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding

No. 17-0213:     

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.  

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.  

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.            

The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                Tax-Free High Grade Portfolio Bond for Puerto Rico Residents     Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.

RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

 

 

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board  representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                               

Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.      

Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.

                RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

 

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                Tax-Free Fund for Puerto Rico Residents, Inc.      Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.

 

                RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

 

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

The Bank of New York Melon, as Trustee, Plaintiff

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

 

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

                The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

 

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.          

Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

 

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

 

17-3284

 

Adversary Proceedings No.

17-00133:           

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

The Bank of New York Melon, as Trustee, Plaintiff

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

 

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                Tax-Free Fixed Income Fund III for Puerto Rico Residents                Commonwealth Court

 

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

The Bank of New York Melon, as Trustee, Plaintiff

 

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

 

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                Tax-Free High Grade Portfolio Bond II for Puerto Rico Residents, Inc.        Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

The Bank of New York Melon, as Trustee, Plaintiff

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

 

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

 

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.            Commonwealth Court

 

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

The Bank of New York Melon, as Trustee, Plaintiff

 

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

 

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.      Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

 

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

The Bank of New York Melon, as Trustee, Plaintiff

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

 

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

 

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

 

                Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.      Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

 

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

The Bank of New York Melon, as Trustee, Plaintiff

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

 

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

 

                                Adversary Proceedings

17-0219 and

17-0220                Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

 

 

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

 

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

 

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

 

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.       Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

 

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

 

The Bank of New York Melon, as Trustee, Plaintiff

 

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

 

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

 

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

 

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

                               

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA"), the Oversight Board representing the Employees Retirement System of the Government of Puerto Rico

17-3566:

 

Adversary Proceeding No. 17-0213:        

 

Action filed by the Oversight Board, representing the ERS, seeking declaratory judgment stating that the security interests asserted by Defendants and described in a security agreement, pursuant to the pension fund bonding resolution of 2008 were not properly perfected. Additionally, plaintiffs sought declaratory judgment stating that Defendants did not have a perfected security interests in loans made by the ERS or any proceeds received on account of said loans. Even if they did have perfected security interests, Section 552 of the Bankruptcy Code operates to cut off that lien in post-petition assets of the ERS.

 

 

This case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.    

 

The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Defendants.

 

                                Adversary Proceedings

17-0219 and 17-0220     

Action filed by certain ERS Bondholder, seeking declaratory judgment, stating that (i) Joint Resolution 188 violated the automatic stay and was void ab initio; (ii) any transfer of pledged property pursuant to Resolution 188 would result in unjust enrichment of the Commonwealth; (iii)  the collateral was not for public use, within the meaning of the United States and the Puerto Rico Constitution; (iv) Resolution 188 constitutes a violation of the takings and contracts clauses in the United States and the Puerto Rico Constitution; and (v) requesting a determination of the ERS bondholders' secure status in the ERS Title III case.

 

The parties reached an agreement to settle this  case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.   Altair Global Credit Opportunities Fund (A), LLC; Andalusian Global Designated Activity Company; Glendon Opportunities Fund, L.P.; Mason Capital Master Fund LP; Nokota Capital Master Fund L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Ocher Rose, L.L.C.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Bond Fund II, Inc.; Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & US Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund (this Fund is being liquidated), Plaintiffs.

The Commonwealth of Puerto Rico; the Financial Oversight and Management Board of the Commonwealth of Puerto Rico; the Puerto Rico Fiscal Agency and Financial Advisory Authority; the Employees Retirement System of the Commonwealth of Puerto Rico; Governor Ricardo Roselló, in his official capacity as the Governor of Puerto Rico; and Raúl Maldonado, in his capacity as Secretary of the Treasury of the Commonwealth of Puerto Rico, Defendants.

 

                                Adversary Proceeding

19-00359              Action filed by Plaintiffs to avoid and recover alleged fraudulent transfers made to Defendants and to disallow claims filed by Defendants in the Title III cases.

The ERS and the Defendants UBS Funds reached an agreement to settle this case and the case is stayed until after thirty (30) days after the District Court approves or denies the Commonwealth Joint Plan of Adjustment. If the Plan is approved, the case will be dismissed. If the Plan is denied, litigation will continue.             The Special Claims Committee of the Financial Oversight and Management Board for Puerto Rico and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as co-trustees of the Employees Retirement System of the Government of Puerto Rico, Plaintiffs

 

 

Defendants 1H-78H, which were not disclosed in the complaint, but which include Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now Tax Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Mortgaged-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgaged-Backed & Income Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents, Inc.); and UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                Adversary Proceeding

19-00367              This action was filed by the Oversight Board, representing the Employees Retirement System of the Government of Puerto Rico (“ERS”) to determine the scope of the ERS Bondholders asserted security interests in the Pledged Property that serves as collateral of the ERS Bonds          The Financial Oversight and Management Board for Puerto Rico, as representative of the Employees Retirement System of the Government of the Commonwealth of Puerto Rico, and the Official Committee of Unsecured Creditors of all Title III Debtors (other than COFINA), as Section 926 trustee of the Commonwealth of Puerto Rico, Plaintiffs

Glendon Opportunities Fund, L.P.; Oaktree-Forrest Multi-Startegy, LLC (Series B); Oaktree Opportunities Fund IX, L.P.; Oaktree Opportunities Fund IX (Parallel 2), L.P.; Oaktree Value Opportunities Fund, L.P.; Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc., Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target  Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Investors Bond Fund (now Puerto Rico Residents Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund, Inc.; Puerto Rico Investors Tax-Free Fund II, Inc.; Puerto Rico Investors Tax-Free Fund III, Inc.; Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.; Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.; Tax-Free Puerto Rico Fund, Inc. (now Tax Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Resident, Inc.); UBS IRA Select Growth & Income Puerto Rico Fund.

 

                                                               

                Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.      Commonwealth Court

 

Case No.

KAC2014-0072 (505)       Shareholders’s derivative action filed by twelve (12) individual plaintiffs and a retirement plan, on behalf of several Puerto Rico investment companies against UBS Financial Services, Inc., UBS Financial Services Incorporated of Puerto Rico, Inc., UBS Trust Company of Puerto Rico and each current and certain former members of the Board of Directors of such investment companies (the "UBS Defendants"). The complaint alleges that the Nominal Defendants suffered millions of dollars in losses due to alleged mismanagement, concealment of conflict of interests, and improper recommendations by the UBS Defendants to retail customers to request and obtain from UBS Bank USA credit lines to purchase shares issued by the Nominal Defendants. Plaintiffs further alleged that UBS Defendants manipulated the Nominal Defendants' market by sustaining inflated prices of shares by acquiring and retaining high volumes of inventory and not disclosing to clients the lack of market liquidity.  They seek relief from the UBS Defendants for unjust enrichment, failure to act in good faith and breach of their fiduciary duties in the form of actual and compensatory damages to be determined at trial, pre-and-post-judgment interest, disgorgement of all fees, and the constitution of a constructive trust over all fees paid by the Nominal Defendants and an award of attorney's fees and litigation cost.           RAUL E. CASASNOVAS BALADO, LOLITA G. DE CASASNOVAS, DORIS LÓPEZ GARCÍA, REYNALDO QUINTANA LATORRE, MANUEL PORRO AS TRUSTEE FOR MANUEL PORRO RETIREMENT PLAN, RAQUEL SILVA RAMÍREZ, ROMUALDO RIVERA, AURIMIR AROCHO TORRES, MANUEL MARTINEZ UMPIERRE, GLAFIRA PORRO VIZCARRA, SARIBEL MATIENZO, BLANCA ORTEGA, FIDEICOMISO PUNTA GORDA, PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Plaintiffs.

 

 

UBS Financial Services, INC.; UBS Financial Services Incorporated of Puerto Rico; UBS Trust Company of Puerto Rico; Mario S. Belaval; Miguel A. Ferrer; Vicente J León; Carlos V. Ubiñas; José Villamil; Agustín Cabrer-Roig; Gabriel Dolagaray Balado; Carlos Nido; Luis M. Pellot-González; Clotilde Pérez; Leslie Highley Jr., Stephen C. Roussin; Does 1-100; and Insurance Companies 1-100, Defendants.

PUERTO RICO FIXED INCOME FUND, INC. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND II, INC. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.)., PUERTO RICO FIXED INCOME FUND III, INC. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND IV, INC. (now  Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND V, INC. (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.), PUERTO RICO FIXED INCOME FUND VI, INC. (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO TARGET MATURITY FUND, INC. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.), PUERTO RICO AAA PORTFOLIO BOND FUND, INC. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc., PUERTO RICO AAA PORTFOLIO BOND FUND II, INC. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.), TAX-FREE PUERTO RICO FUND, INC. (now Tax Free Fund for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO FUND II, INC. (now Tax Free Fund II for Puerto Rico Residents, Inc., TAX-FREE PUERTO RICO TARGET MATURITY FUND, INC. (now Tax Free Target Maturity Fund for Puerto Rico Residents, Inc.), and PUERTO RICO MORTGAGE-BACKED & U.S. GOVERNMENT SECURITIES FUND, INC. (now US Mortgage-Backed & Income Fund for Puerto Rico Residents, Inc.), Nominal Defendants

 

                                UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

 

Title III case filed under the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA") THE Oversight Board representing the Puerto Rico Sales Tax Financing Corporation

17-3284

 

Adversary Proceedings No.

17-00133:           

Interpleader and declaratory relief action filed by the Bank of New York Melon. The Bank had an amount of money due for distribution to COFINA bondholders and the Commonwealth, COFINA and several beneficial holders of COFINA bonds and insures who insure certain bonds and COFINA were claiming ownership to those monies.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019. 

The Bank of New York Melon, as Trustee, Plaintiff

Puerto Rico Sales Financing Corporation (COFINA); Whitebox Multi-Strategy Partners, L.P.; Whitebox Asymetric Partners, L.P.; Whitebox Institutional Partners, L.P.; Pandora Select Partners, L.P.; Ambac Assurance Corporation; Franklin Advisers, Inc. and CEDE & Co., as nominee for the Depository Trust Company, Defendants

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, joined as defendants

 

                                Adversary Proceeding

17-0257                Action filed to resolve whether the sales and use taxes purportedly pledged by COFINA to secure debt are property of the Commonwealth or COFINA under applicable law.

 

On August 29, 2018, the parties entered into a Plan Support Agreement and the Plan of Adjustment was filed on October 19, 2018. On November 8, 2018, the Puerto Rico legislature approved a bill to allow for the implementation of the COFINA restructuring agreement, effective upon the consummation of the COFINA Plan of Adjustment.  The COFINA Plan of Adjustment was confirmed by the Court on February 12, 2019.    The Official Committee of Unsecured Creditors of the Commonwealth of Puerto Rico, as agent of the Commonwealth of Puerto Rico, Plaintiff

 

Bettina Whyte, as agent of The Puerto Rico Sales Tax Financing Corporation, Defendant

Puerto Rico AAA Portfolio Bond Fund II, Inc. (now Tax-Free High Grade Portfolio Bond Fund II for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Bond Fund, Inc. (now Tax-Free High Grade Portfolio Bond Fund for Puerto Rico Residents, Inc.); Puerto Rico AAA Portfolio Target Maturity Fund, Inc. (now Tax-Free High Grade Portfolio Target Maturity Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund, Inc. (now Tax-Free Fixed Income Fund for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund II, Inc. (now Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc.);Puerto Rico Fixed Income Fund III, Inc. (now Tax-Free Fixed Income Fund III for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund IV, Inc. (now (now Tax-Free Fixed Income Fund IV for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund V, Inc. (now (now Tax-Free Fixed Income Fund V for Puerto Rico Residents, Inc.); Puerto Rico Fixed Income Fund VI, Inc. (now (now Tax-Free Fixed Income Fund VI for Puerto Rico Residents, Inc.); Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. (now GNMA & U.S. Government Target Maturity Fund for Puerto Rico Residents); Puerto Rico Investors Bond Fund I; Puerto Rico Investors Tax-Free Fund, Inc.

Puerto Rico Investors Tax-Free Fund, Inc. II; Puerto Rico Investors Tax-Free Fund III, Inc.;

Puerto Rico Investors Tax-Free Fund IV, Inc.; Puerto Rico Investors Tax-Free Fund V, Inc.

Puerto Rico Investors Tax-Free Fund VI, Inc.; Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc. (now U.S. Mortgage-Backed & Income Fund for Puerto Rico Residents); Tax-Free Puerto Rico Fund, Inc. (now Tax-Free Fund for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Fund II, Inc. (now Tax-Free Fund II for Puerto Rico Residents, Inc.); Tax-Free Puerto Rico Target Maturity Fund, Inc. (now Tax-Free Target Maturity Fund for Puerto Rico Residents); UBS IRA Select Growth & Income Puerto Rico Fund, intervenors.

 

 

 

 

 ADVISORY CONTRACTS 4 NCEN_811-23681_35327136_0921.htm advagmt-taxfreefixedincomefu.htm - Generated by SEC Publisher for SEC Filing

TAX-FREE FIXED INCOME FUND II FOR PUERTO RICO RESIDENTS, INC.

AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT

Amended and Restated Investment Advisory Agreement (the “Agreement”) made and entered into as of May 12, 2021, by and between Tax-Free Fixed Income Fund II for Puerto Rico Residents, Inc. (the “Fund”), a corporation organized under the laws of the Commonwealth of Puerto Rico and a management investment company currently registering under the Investment Company Act of 1940, as amended (the “1940 Act”), and UBS Asset Managers of Puerto Rico, a division of UBS Trust Company of Puerto Rico (the “Adviser”), the Fund’s investment adviser, currently registering under the Investment Advisers Act of 1940, as amended (the “Advisers Act”).

WHEREAS, the Fund and the Adviser initially entered into the Investment Advisory Agreement as of January 30, 2004, when the Fund was registered under the Puerto Rico Investment Companies Act and subject to the rules and regulations thereunder;

WHEREAS, the Fund is registered under the 1940 Act as a closed-end management investment company and the Adviser is registered under the Advisers Act;

WHEREAS, the Fund desires to retain the Adviser as investment adviser to furnish investment advisory services to the Fund; and

WHEREAS, the Adviser has full capacity and is willing to provide investment advisory services to the Fund on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows.

1.                  Appointment.  The Fund hereby appoints the Adviser as investment adviser of the Fund for the period and on the terms set forth in this Agreement. The Adviser accepts such appointment and agrees to render the services set forth herein for the compensation provided herein.

2.                  Duties as Investment Adviser.

(a)               Subject to the supervision of the Fund’s Board of Directors (the “Board”), the Adviser will provide a complete and continuous investment program for the Fund, including investment research and management with respect to all securities and investments and cash equivalents of the Fund.

(b)               The Adviser agrees that in placing orders with brokers and dealers, it will attempt to obtain the best net price and most favorable execution, provided that, subject to the provisions of the 1940 Act, the Securities Exchange Act of 1934, as amended (the "Exchange Act") and to the extent permitted by the Securities and Exchange Commission, (the “SEC”), the Adviser may purchase and sell portfolio securities to and from brokers who provide the Adviser with research analysis, statistical or pricing advice, or similar services.  The Adviser will consider the full range and quality of a broker’s or dealer’s services. Factors considered by the Adviser in selecting brokers and dealers may include the following:  price, the broker’s or dealer’s facilities,

 

the broker’s or dealer’s reliability and financial responsibility, the ability of the broker or dealer to effect securities transactions, particularly with regard to such aspects as timing, order size and execution of orders, and the research and other services provided by that broker or dealer to the Adviser, notwithstanding that the Fund may not be the direct or exclusive beneficiary of those services. The Adviser will not be obligated to seek in advance competitive bidding or the most favorable commission rate applicable to any particular transaction for the Fund or to select any broker or dealer on the basis of its “posted” commission rate. The Adviser may cause the Fund to pay a commission for effecting a transaction for the Fund in excess of the amount another broker or dealer would have charged for effecting the transaction, provided that the Adviser determines in good faith that such commission is reasonable in relation to the value of the brokerage and/or research services provided by the broker or dealer to the Adviser. Research services furnished by the brokers or dealers through which the Fund effects securities transactions may be used by the Adviser in advising its other clients (including persons affiliated with the Adviser), and conversely, such research services furnished to the Adviser in connection with other clients may be used in advising the Fund.  The Adviser will seek to allocate the opportunity to purchase or sell a security or other investment among advisory clients in accordance with the Adviser’s trade allocation policies and procedures so that accounts with like investment strategies are treated fairly and equitably over time. In the event it is not possible to obtain the same price or time of execution for all of the securities or other investments purchased or sold for the Fund, transactions for the Fund may be reported by using the average price of these transactions. The Adviser may purchase or sell the same security for more than one client on an aggregated basis to obtain a favorable price to the extent permitted by applicable law.  These orders may be averaged as to price and allocated as to amount according to each client’s daily purchase or sale orders or upon some other basis deemed equitable by the Adviser.

(c)               Subject to the provisions of the 1940 Act, the Exchange Act and to the extent permitted by the SEC, the Adviser may engage on behalf of the Fund in securities and other transactions with its affiliates (or other dealers) and transactions in securities for which one of its affiliates is a member of the underwriting syndicate.  In no instance will portfolio securities or other investments be purchased from or sold to the Adviser or any of its affiliates or with any party with whom the Adviser has entered into an agreement pursuant to Section 5 of this Agreement or affiliated person thereof, except in accordance with applicable law and the policies and procedures adopted by the Board.

(d)               In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Adviser hereby agrees that all records which it maintains for the Fund are the property of the Fund and further agrees to surrender promptly to the Fund any such records upon the Fund’s request. Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.

(e)               The Adviser will provide the Fund’s administrator with any assistance regarding the valuation of the Fund’s portfolio investments as the latter may reasonably request.

3.                  Custodian.  The Adviser is authorized, in its capacity as investment adviser, to give instructions to the Fund’s custodian with respect to all investment decisions regarding the Fund.

 

2

265731943v.3

 

4.                  Further Duties.  In all matters relating to the performance of this Agreement, the Adviser will act in conformity with the Fund’s Certificate of Incorporation (the “Certificate”), as the Certificate may be amended from time to time, By-Laws, Code of Ethics, policies and procedures adopted by the Board, the then current prospectus, the 1940 Act and the rules and regulations thereunder, the Exchange Act and the rules and regulations thereunder, and any other applicable laws and regulations of the United States and Puerto Rico.

5.                  Retention by the Adviser of a Sub‑Investment Adviser.  The Adviser may from time to time, in its sole discretion to the extent permitted by applicable law, appoint one or more sub-advisers, including, without limitation, affiliates of the Adviser, to perform investment advisory services with respect to the Fund; provided, however, that the compensation of such person or persons shall be paid by the Adviser and that the Adviser shall be as fully responsible to the Fund for the acts and omissions of any sub-adviser as it is for its own acts and omissions. The Adviser may terminate any or all sub-advisers in its sole discretion at any time to the extent permitted by applicable law. The Adviser will disclose fully to the Board in advance the terms of any agreement entered into pursuant to this Section including, but not limited to, the compensation to be paid, and will notify the Board in advance of any change in the terms of such agreement.

6.                  Services Not Exclusive.  The services furnished by the Adviser hereunder are not to be deemed exclusive and the Adviser shall be free to furnish smiler services to others so long as its services under this Agreement are not materially impaired thereby. Nothing in this Agreement shall limit or restrict the right of any director, officer, or employee of the Adviser, who may also be a director, officer, or employee of the Fund, to engage in any other business or to devote his or her time and attention in pan to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.

7.                  Expenses.

(a)               During the term of this Agreement, the Fund will bear all expenses incurred in the Fund’s operations and the offering of the Fund’s shares or any debt securities, except for such expenses specifically assumed by the Adviser.

(b)               Expenses borne by the Fund will include but are not be limited to the following (which shall be in addition to the fees payable to and expenses incurred on behalf of the Fund by the Adviser under this Agreement) (1) the costs (including brokerage commissions, if any) of securities purchased or sold by the Fund and any losses incurred in connection  therewith, (2) organizational expenses, including legal expenses, of the Fund; (3) filing fees and expenses relating to the registration of the Fund under the 1940 Act, (4) fees and salaries payable to directors who are independent of the Adviser and any party retained pursuant to Section 5 hereof or their affiliates, (5) all expenses incurred in connection with such directors’ services, including travel expenses, (6) taxes (including any income or franchise taxes) and governmental fees (including transfer taxes), (7) costs of any liability, uncollectible items of deposit and insurance or fidelity bonds, (8) any costs, expenses or losses arising out of a liability or claim for damages or other relief asserted against the Fund for violation of any law, (9) Fund legal fees and disbursements, including legal fees of special counsel for the independent directors, if one is retained, (10) accounting and auditing expenses (other than those incurred in providing comfort to the underwriter in connection with the initial public offering of the Fund’s shares or an offering of

3

265731943v.3

 

debt securities), (11) fees and disbursements of custodians and securities depositories, administrator, transfer agent, dividend disbursing agent and registrar, and other agents, (12) expenses of printing and distributing reports to shareholders, (13) any extraordinary expenses, including reasonable fees and disbursements of litigation counsel and indemnification expenses incurred by the Fund, (14) fees, voluntary assessments and other expenses incurred in connection with membership in investment company or trade organizations, (15) costs of mailing and tabulating proxies and costs of meetings of shareholders, the Board and any committees thereof, (16) the cost of investment company literature and other publications provided to directors and officers, (17) costs of mailing, stationary and communications equipment, (18) interest charged on borrowings; and (19) the cost of preparing, printing and mailing certificates, if any, representing the Fund’s shares or debt securities.

(c)               The Fund may pay directly any expense incurred by it in its normal operations and, if any such payment is consented to by the Adviser and acknowledged as otherwise payable by the Adviser pursuant to this Agreement, the Fund may reduce the fee payable to the Adviser pursuant to Section 8 hereof by such amount.  To the extent that such deductions exceeds the fee payable to the Adviser on any monthly payment date, such excess shall be carried forward and deducted in the same manner from the fee payable on succeeding monthly payment dates.

(d)               The Adviser agrees to pay all of its own expenses incurred in connection with this Agreement, including any compensation for services provided to the Fund by the directors, officers, or employees of the Fund who are affiliated with the Adviser or its affiliates or any person hired pursuant to Section 5 hereof.

(e)               The payment or assumption by the Adviser of any expense of the Fund that the Adviser is not required by this Agreement to pay or assume shall not obligate the Adviser to pay or assume the same or any similar expense of the Fund on any subsequent occasion.

8.                  Compensation.

(a)               For the services provided and the expenses assumed pursuant to this Agreement, the Fund will pay the Adviser and the Adviser will accept as full compensation therefor a fee at the annual rates set forth on Appendix A attached hereto, as such appendix may be amended from time to time upon agreement in writing of the parties hereto.

(b)               The fee shall be accrued weekly and payable monthly to the Adviser on or before the last business day of the next succeeding calendar month.

(c)               If this Agreement becomes effective or terminates before the end of any month, the fees for the period from the effective date to the end of the month or from the beginning of such month to the date of termination, as the case may be, shall be prorated according to the proportion which such period bears to the full month in which such effectiveness or termination occurs.

9.                  Confidentiality.  The Adviser will treat confidentially and as proprietary information of the Fund all records and other information relative to the Fund, any of the Fund’s prior, current or potential shareholders or noteholders, and will not use such records, and information for any purpose other than performance of its responsibilities and duties hereunder,

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except after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where Adviser may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Fund.

10.              Limitation of Liability of the Adviser.  The Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the performance of this Agreement, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of its duties or from reckless disregard by it of its obligations or duties under this Agreement. The Adviser may rely on any notice or communication (written or oral) by an authorized person of the Fund reasonably believed by it to be genuine.  These limitations shall not relieve the Adviser from any responsibility, obligation, or duty that the Adviser may have under state statutes, the laws of Puerto Rico, or any federal securities law which is not waivable.  Any person, even though also an officer, partner, employee, or agent of the Adviser, who may be or become a director, officer, employer, or agent of the Fund shall be deemed, when rendering services to the Fund or acting with respect to any business of the Fund, to be rendering such service to or acting solely for the Fund and not as a director employee, or agent or one under the control or direction of the Adviser even though paid by it.  Nothing herein shall be deemed a waiver of any rights which the Fund may have pursuant to applicable securities laws or regulations.

11.              Duration and Termination.

(a)               This Agreement shall become effective upon the date first above written, provided that this Agreement shall not take effect unless it has first been approved by a majority of the directors of the Fund, including a majority of the independent directors in accordance with the requirements of the 1940 Act and the rules and regulations thereunder.

(a)               Unless sooner terminated as provided herein, this Agreement shall continue in effect for one year from its effective date. Thereafter if not terminated, this Agreement shall continue for successive annual periods, provided that such continuance is specifically approved at least annually (a) by vote of a majority of those members of the Board who are not interested persons of any party to this Agreement, cast in person (or otherwise, as consistent with applicable laws, regulations and related guidance and relief) at a meeting called for the purpose of voting on such approval, and (b) by the Board or by vote of a majority of the outstanding voting securities of the Fund.

(b)               Notwithstanding the foregoing, this Agreement may be terminated at any time, without the payment of penalty, by unanimous vote of the Board or by a vote of a majority of the outstanding voting securities of the Fund on 60 days’ written notice to the Adviser or by the Adviser at any time, without the payment of any penalty, on 60 days’ written notice to the Fund.

(c)               This Agreement will automatically terminate in the event of its assignment. As used in this Agreement, the terms “majority of the outstanding voting securities,” “interested persons” and “assignment” shall have the same meanings as such terms in the 1940 Act.

 

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12.              Amendment of this Agreement.  No provision of this Agreement may be changed, waived, discharged or terminated orally except by an instrument signed by the party against which enforcement of the change, waiver, discharge or termination is sought. Any amendment of this Agreement shall be subject to the 1940 Act.

13.              Governing Law.  This Agreement shall be construed in accordance with the laws of the Commonwealth of Puerto Rico and in accordance with the applicable provisions of the 1940 Act.

14.              Miscellaneous. The captions in this Agreement arc included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby.  This Agreement shall be binding upon and shall inure to the benefit of the panics hereto and their respective successors.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated as of the day and year first above written.

 

TAX-FREE FIXED INCOME FUND II FOR PUERTO RICO RESIDENTS, INC.

UBS ASSET MANAGERS OF pUERTO RICO, a division of UBS Trust Company of Puerto Rico

 

By:                                                                   
Name: Carlos V. Ubiñas
Title:   President

By:                                                                   
Name: Leslie Highley, Jr.
Title:   Managing Director

 

TAX-FREE FIXED INCOME FUND II FOR PUERTO RICO RESIDENTS, INC.

UBS ASSET MANAGERS OF pUERTO RICO, a division of UBS Trust Company of Puerto Rico

 

By:                                                                   
Name: Liana Loyola
Title:   Secretary

By:                                                                   
Name: William Rivera
Title:   Executive Director

 

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Appendix A

 

The Fund will pay to the Adviser, as investment adviser, an annual fee of 0.75% of the Funds average weekly gross assets (including assets purchased with the proceeds of leverage). For purposes of calculating the advisory fee hereunder, the Fund’s gross assets shall be calculated pursuant to the procedures adopted by resolutions of the Board for calculating the value of the Fund’s assets or delegating such calculations to third parties.

8

265731943v.3

 MATERIAL AMENDMENTS 5 NCEN_811-23681_56053799_0921.htm certdirectorsage.htm - Generated by SEC Publisher for SEC Filing

TAX FREE FUND FOR PUERTO RICO RESIDENTS, INC.

TAX FREE FUND II FOR PUERTO RICO RESIDENTS, INC.

TAX FREE TARGET MATURITY FUND FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE HIGH GRADE PORTFOLIO TARGET MATURITY FUND FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE HIGH GRADE PORTFOLIO BOND FUND FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE HIGH GRADE PORTFOLIO BOND FUND II FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE FIXED INCOME FUND FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE FIXED INCOME FUND II FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE FIXED INCOME FUND III FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE FIXED INCOME FUND IV FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE FIXED INCOME FUND V FOR PUERTO RICO RESIDENTS, INC.

TAX-FREE FIXED INCOME FUND VI FOR PUERTO RICO RESIDENTS, INC.

MULTI-SELECT SECURITIES FUND FOR PUERTO RICO INVESTORS

SHORT TERM INVESTMENT FUND FOR PUERTO RICO RESIDENTS, INC.

US MORTGAGE-BACKED & INCOME FUND FOR PUERTO RICO RESIDENTS, INC.

GNMA & US GOVERNMENT TARGET MATURITY FUND FOR PUERTO RICO RESIDENTS, INC.

U.S. MONTHLY INCOME FUND FOR PUERTO RICO RESIDENTS, INC.

 

 

I, Liana I. Loyola, Secretary of the Board of Directors of the of each of the above funds* (each referred to herein as a “Fund” or collectively referred to as the “Funds”), hereby certify that the following resolutions were approved by the members of the Board of Directors of each Fund on March 11, 2021:

 

         RESOLVED, that based on the information and recommendation provided by management and counsel, and pursuant to Article III(2) of each Fund’s Bylaws, the Board of Directors of the Tax Free Puerto Rico Fund, Inc., Tax Free Puerto Rico Fund II, Inc., Tax Free Puerto Rico Target Maturity Fund, Inc., Puerto Rico AAA Portfolio Target Maturity Fund, Inc., Puerto Rico AAA Portfolio Bond Fund, Inc., Puerto Rico AAA Portfolio Bond Fund II, Inc., Puerto Rico Fixed Income Fund, Inc., Puerto Rico Fixed Income Fund II, Inc., Puerto Rico Fixed Income Fund III, Inc., Puerto Rico Fixed Income Fund IV, Inc., Puerto Rico Fixed Income Fund V, Inc., Puerto Rico Fixed Income Fund VI, Inc., Multi-Select Securities Puerto Rico Fund, Puerto Rico Short Term Investment Fund, Inc., Puerto Rico Mortgage-Backed & U.S. Government Securities Fund, Inc., Puerto Rico GNMA & U.S. Government Target Maturity Fund, Inc. and U.S. Municipal & Income Fund, Inc. (each, a “Fund,” and collectively, the “Funds”), hereby approves to fix at seven (7) the total number of members of each Fund’s Board of Directors, and

 

         FURTHER RESOLVED, that Article III(3) of each Fund’s Bylaws be amended regarding the references to the directors’ retirement age to increase it from eighty (80) years of age to eighty five (85) years of age, and

 

* In compliance with the SEC Regulations, the Funds changed their corporate names in May 2021.

 

         FURTHER RESOLVED, that the seven (7) members of each Fund’s Board of Directors will maintain their terms of service pursuant to Article III of the Funds’ Bylaws, and the nomination for their reelections will occur in a staggered manner, and

 

         FURTHER RESOLVED, to request from the Funds’ Governance and Nominating Committees a recommendation of nominees to fill the two available director’s vacancies.

 

IN WITNESS WHEREOF, I have executed this Certificate on behalf of the Funds as of this 23rd day of August 2021.

 

 

_/s/ Liana I. Loyola, Esq.___________

Liana I. Loyola, Esq.

Secretary