Judge chides unsecured creditors as PREPA bondholders join forces against debt deal
By The Star Staff
U.S. District Judge Laura Taylor Swain, who is presiding over the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy process, in an order this week warned the Unsecured Creditors Committee (UCC) that they must not incorporate objections to the current proposed debt deal for the utility that they have presented before.
Swain reiterated a previous order to the effect that she would not consider any plan of adjustment arguments incorporated from earlier objections.
She had ruled that no objections could be incorporated by reference because the new adjustment plan filed by PREPA in August is different from previous versions, and she wanted to start fresh. The UCC violated that order, she said.
“The Court’s intent … was unmistakably to operate on a blank slate and that any arguments concerning the new PREPA Plan, at any stage, would have to be made anew and within the page-limit and other limitations set by order,” she ruled. “Nevertheless, in its objection to the proposed disclosure statement to the current iteration of the PREPA plan and in violation of the Termination Order, the [UCC] on numerous occasions asserts that it is incorporating by reference arguments made in its overruled objection to the disclosure statement to an earlier version of the proposed PREPA plan.”
Meanwhile, PREPA bondholders and insurers that oppose the third amended adjustment plan and hold 49% of PREPA’s debt signed onto a cooperation agreement, according to stipulation dated Oct. 24.
GoldenTree Asset Management, Syncora Guarantee, Assured Guaranty, and some members of the PREPA Ad Hoc Group agreed to inform each other about any substantive discussions with the Financial Oversight and Management Board about any transaction involving PREPA.
The agreement comes after BlackRock Financial Management, Whitebox, Taconic, Franklin and Nuveen agreed to support PREPA’s debt plan.
BlackRock Financial Management, Whitebox, Taconic, Franklin and Nuveen agreed to buy $1.6 billion in debt from PREPA as part of its bankruptcy exit plan. In exchange, they would receive $124.4 million in bond commitment and financing fees. National Public Finance Guarantee Corporation has also settled its debt to receive a higher payout.