By The Star Staff
Bankruptcy lawyer Rolando Emmanuelli does not expect U.S. District Judge Laura Taylor Swain, who is overseeing the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy, to issue a ruling before May on whether to approve the utility’s debt adjustment plan.
Emmanuelli said that by April 5, all stakeholders must submit final memoranda on facts and conclusions and then the case will be deemed submitted.
“However, this is a very complicated case, more so than the commonwealth case,” he said in a radio interview.
Swain has more than “900 objections she must resolve -- that will take time,” the attorney added.
Most recently, Cobra Acquisitions requested a trial on millions of dollars in claims PREPA owes it for repairs to the grid following the 2017 hurricanes. The judge sent the matter to mediation.
She also has several “novel” decisions to make, including a petition from the Financial Oversight and Management Board seeking to preempt the powers of the Puerto Rico Energy Bureau to prevent it from interfering in issues related to the rates consumers will have to pay following the bankruptcy.
There are two challenges to the constitutionality of the Puerto Rico Oversight, Management and Economic Stability Act, commonly known as PROMESA, including one that alleges that it violates the uniformity clause by creating a separate bankruptcy process for the territory. In appellate court, bondholders are appealing Swain’s ruling that their debt is unsecured.
“If that ruling is overturned, it will mean that we have to start the bankruptcy again,” Emmanuelli said.
PREPA’s debt adjustment plan (PAD by its Spanish acronym) is a proposal to reduce the utility’s debt by about 80% to $2.5 billion, and end the utility’s bankruptcy. The plan would raise electricity rates for 35 years or more to pay debt service on bonds and other payments to bondholders. The plan also imposes a legacy charge on customer bills to pay off the debt.
Creditors including bondholders, vendors and others claim PREPA owes them over $10 billion. In addition, PREPA owes its retirement system around $4.4 billion in present and future obligations.
Bondholders alone claimed PREPA owed them about $8.4 billion. The Oversight Board challenged their claim, and the U.S. District Court for the District of Puerto Rico subsequently ruled that bondholders have an allowed claim of $2.4 billion. The PAD proposes to pay bondholders about $1.57 billion, including fees related to the plan.