Fiscal board seeks extension of PREPA debt deal mediation
By The Star Staff
The Financial Oversight and Management Board has asked the federal Title III bankruptcy court to extend the deadline to end negotiations for a new debt deal for the Puerto Rico Electric Power Authority (PREPA).
The oversight board wants to extend through June 1 the May 2 deadline imposed by the court to either file a plan of adjustment, or a term sheet for a plan of adjustment, or a litigation schedule, or a declaration and memorandum of law showing cause why the court should not consider dismissing PREPA’s Title III case, consistent with the court’s directive in its March 8 order.
Earlier this year, the governor canceled the previous PREPA debt adjustment plan reached in 2019 for lack of support. The PREPA bankruptcy case has been virtually paralyzed as the local government opposes a debt deal that may result in power rate hikes.
On March 8, the Title III court entered an order directing the oversight board to file an indication of its proposed path forward to conclude PREPA’s Title III case by May 2, 2022, including by filing a proposed plan, a plan term sheet, a litigation schedule, or a brief showing cause why PREPA’s Title III case should not be dismissed.
The first three options were to be accompanied by either a confirmation timetable or litigation schedule. On April 8, the court appointed a mediation team to facilitate negotiations on the issues in PREPA’s Title III case. The mediation team is led by Judge Shelley C. Chapman and also includes Judge Robert D. Drain and Judge Brendan L Shannon.
Participating in the mediation are the oversight board, the Fiscal Agency and Financial Advisory Authority, the Ad Hoc Group of PREPA Bondholders, National Public Finance Guarantee Corp., Assured Guaranty Corp. and Assured Guaranty Municipal Corp., Syncora Guarantee Inc., the Electrical Industry and Irrigation Workers Union (UTIER), PREPA’s retirement system (SREAEE), the Official Committee of Unsecured Creditors and PREPA’s fuel line lenders.
On April 21, the mediation team proposed that the oversight board seek an extension of the mediation to present the court with a better informed statement of the path forward after the mediation has progressed.
“In addition, extending the Path Forward Deadline to June 1, 2022 will synchronize with the initial Termination Date for mediation,” the motion states. “The Mediation Team informed the Oversight Board it has contacted counsel for each Mediation Party regarding the requested extension, and that each of them consented or confirmed it did not object.”
The oversight board said it has not created the urgency through any lack of due diligence; has made a bona fide effort to resolve the matter; has made reasonable, good-faith communications to resolve or narrow the issues that are being brought to the court, and no party opposes the relief requested.
Board member Justin Peterson tweeted a video last week urging the parties to reach a PREPA deal soon as creditors have not been paid for over seven years. PREPA filed for bankruptcy to restructure its $9 billion debt in 2017.