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Judge Laura Taylor Swain, who oversees the bankruptcy of the Puerto Rico Electric Power Authority, ordered all parties Monday to consult with the Mediation Team to determine the issues that must be resolved before the approval of a debt adjustment plan to restructure the utility’s $9 billion debt.
In January, the First Circuit Court of Appeals overturned certain determinations previously made by Judge Swain, specifically regarding the extent and value of bondholder claims within PREPA’s Title III case. In light of this reversal, Judge Swain requested the Financial Oversight and Management Board (FOMB), representing PREPA, to submit a proposed timetable for the formulation and filing of an amended plan of adjustment. The FOMB agreed to submit a plan by March 17.
Despite the FOMB’s commitment, Judge Swain noted that there are still substantial unresolved issues pertaining to the amount and priority of PREPA bondholders’ claims. These issues must be settled before any new or amended plan of adjustment can be approved. Key concerns include determining which funds legally constitute net revenues, assessing the extent to which PREPA bondholders have an administrative expense claim, and evaluating whether any such claim must be paid from funds other than existing or future net revenues.
Judge Swain emphasized that addressing these issues prior to a confirmation hearing would promote both judicial efficiency and the responsible use of party resources. By ensuring that all concerns are addressed before moving forward, the bankruptcy proceedings can progress in a more streamlined and effective manner.
“The court believes that these issues should be determined prior to a confirmation hearing in a manner that promotes judicial efficiency and the economical use of parties’ resources,” she said.
