Bondholders ask court to compel fiscal board to provide PREPA revenue data
- The San Juan Daily Star
- 9 hours ago
- 3 min read
By THE STAR STAFF
The bondholder group in the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy case is asking the federal court to compel the Financial Oversight and Management Board to turn over documents and testimony related to PREPA’s post‑petition net revenues, figures that could determine whether bondholders are entitled to an administrative expense claim topping $3.7 billion.
In a reply filed Feb. 6, the bondholders argue that the Court explicitly authorized discovery aimed at resolving the central factual dispute in the administrative expense motion: how much net revenue PREPA generated after entering Title III bankruptcy in 2017. PREPA’s own monthly operating reports (MORs) reflect more than $3.7 billion in post‑petition net revenues through fiscal year 2023. But the oversight board now contends that the reports are inaccurate and that, once recalculated, net revenues are “less than zero.”
The bondholders say the oversight board has refused to produce the data and backup materials supporting that recalculation.
“There is no conceivable basis for the Board to withhold such information,” they wrote, emphasizing that the court never barred discovery into the oversight board’s current net‑revenue calculations.
The filing asserts that the oversight board is attempting to prevent disclosure of documents that could show PREPA’s historical methodology for calculating net revenues was consistent -- methodology the board is now challenging. The bondholders seek: depositions of PREPA officials with personal knowledge of how the net‑revenue figures in the MORs were generated, evidence confirming PREPA’s historical practice for calculating net revenues and current expenses, and financial data from PREPA’s offering statements relating to revenue and expense metrics.
The oversight board has objected to those requests, calling them burdensome. But the bondholders argue that the board has offered no evidence to support those claims and, in some cases, could resolve the issue simply by confirming whether responsive documents exist.
A major point of contention involves billions of dollars in capital spending that the oversight board deducts from revenues in its revised calculations. According to the bondholders, many of those expenditures are being covered -- or will be reimbursed -- by federal disaster‑recovery funds. Because PREPA itself will not ultimately pay those amounts, the bondholders say they cannot be classified as “necessary operating expenses” under the Trust Agreement or under Bankruptcy Code Section 928(b). Alternatively, the bondholders argue, if the federal reimbursements count as “moneys received,” they should be treated as revenues instead of reducing net revenues.
The oversight board, the filing notes, has produced large volumes of documents -- including public filings, material already in bondholders’ possession, and “scores of scanned and virtually illegible” invoices for one‑time costs -- but has not provided the actual calculations or explanations behind its assertion that PREPA’s net revenues are negative.
Bondholders also asked the board to stipulate that PREPA did not prepare annual budgets required under Section 504 of the Trust Agreement during the post‑petition period, something they say would impose no burden. The oversight board declined to do so, which the reply characterizes as another example of obstructing discovery on facts not genuinely in dispute.
The bondholders argue that the board is attempting “to prevent the Bondholders from expeditiously proving facts that are not actually disputed.” They are asking the court to order production of the outstanding discovery so the parties and the court can evaluate PREPA’s true post‑petition financial performance -- an issue that will shape the outcome of the long‑running bankruptcy case and potential recovery for bondholders.