Fiscal board seeks progress report from gov’t on possible mediation for PREPA debt plan
By The Star Staff
The court overseeing Puerto Rico’s bankruptcy has amended its March 8 order indicating that it was exploring whether a judicial mediator or mediation team can be made available to facilitate a plan of adjustment for the Puerto Rico Electric Power Authority, which will not require legislative approval.
The March 16 order asked the government to submit by March 18 a report on the progress with stakeholders toward eliciting consent for mediation and toward defining the scope of mediation.
The Financial Oversight and Management Board announced that the Fiscal Agency and Financial Advisory Authority, the Ad Hoc Group of PREPA Bondholders, the monolines Assured, National, and Syncora, the Electrical Industry and Irrigation Workers Union (UTIER) and PREPA’s retirement system, the Official Committee of Unsecured Creditors, and PREPA’s fuel line lenders expressed a willingness to join mediation with respect to a consensual plan of adjustment.
The mediator has yet to be appointed. After the government canceled a previous plan of adjustment that was negotiated in 2019, U.S. District Court Judge Laura Taylor Swain gave the parties until May to come up with a new debt deal.
“The government parties submit that the proposed mediation should pursue a plan of adjustment for PREPA with as much consensus as possible, but with at least the support of one impaired accepting class,” the oversight board said. “The mediation should include all relevant issues, including over $8 billion in bond debt and asserted security interests, over $700 million in fuel line loans and their asserted priority, general unsecured claims and collective bargaining as UTIER is one of two active labor unions representing PREPA employees, with the other labor union being the Union de Empleados Profesionales Independiente de la AEE (UEPI).”
The oversight board said it believes that it would be most productive for mediation to include both UTIER and UEPI, so that all PREPA employees are represented, and has reached out to UEPI counsel to inquire about their willingness to participate. The union has not yet responded.
“The mediation should proceed expeditiously to allow the Oversight Board to meet the May 2nd deadline for submission of a plan, a term sheet, or, if necessary, a litigation schedule for unresolved disputes, with the possibility of requesting an extension if progress is made, or the mediator determines it would be cost-beneficial,” the oversight board said. “Each of the creditor groups the Oversight Board contacted is supportive of engaging in mediation pursuant to a mediation agreement on substantially similar terms to that entered into by the mediation parties in connection with the plan of adjustment for the Commonwealth of Puerto Rico.”
The island House of Representatives asked to take part in the mediation.
“Currently, the Oversight Board does not anticipate developing or negotiating a PREPA plan of adjustment requiring legislation. But, if that changes, the Oversight Board would welcome the Legislature’s participation in mediation if such a restructuring proposal is developed,” the board said. “In the meantime, the Oversight Board invites the legislative representatives to submit to the Oversight Board all positions or proposals on key issues related to PREPA’s restructuring that they believe should be considered or they urge on the Oversight Board.”