By The Star Staff
U.S. District Court Judge Laura Taylor Swain on Thursday gave the Financial Oversight and Management Board an additional week, until next Thursday, Dec. 8, to file with the Title III bankruptcy court a debt adjustment plan for the Puerto Rico Electric Power Authority (PREPA).
The mediation team overseeing negotiations to restructure bankrupt PREPA’s debt informed the special federal court that the oversight board has not submitted data relevant to the negotiations and asked for an extension to the Dec. 1 deadline to submit a new debt adjustment plan (PAD by its Spanish acronym) for the power utility.
“The Court is persuaded that the Mediation Team’s extension request is reasonable and that the extension is needed to allow the exchange and review of information necessary to advance negotiations,” the judge said. “Accordingly, for the reasons set forth in the Second Mediation Report, the deadline for the Oversight Board to file a proposed plan of adjustment, disclosure statement (and corresponding motion for approval thereof), and proposed confirmation schedule contemplating a June 2023 confirmation hearing is hereby extended to December 8, 2022.”
The mediation team had informed the court Thursday that despite reasonable requests by the Ad Hoc Group and the monolines, the oversight board was still in the process of providing basic data and analyses relevant to the ongoing plan negotiations.
“Without such information, the Mediation Team believes no further progress toward a consensual resolution can be achieved,” the mediators said in a motion. “Stated differently, good faith negotiations between the Oversight Board, the Ad Hoc Group, and the Monolines require transparency from both sides and continued engagement based on a reasonable set of underlying facts and assumptions, with each side willing to be persuaded that its analyses are not necessarily dispositive. Accordingly, the Mediation Team requests that this Court extend the Scheduling Order’s December 1, 2022 deadline for the Oversight Board to file a proposed plan of adjustment by one week.”
Swain had ordered the oversight board to submit a PAD by Thursday, Dec. 1.
On April 8, the Title III court appointed a mediation team comprising federal bankruptcy judge Shelley C. Chapman as lead mediator, along with judges Robert D. Drain and Brendan L. Shannon, to facilitate confidential negotiations among the mediation parties. The termination date of the mediation has been extended by the court multiple times. The court ordered mediation to end on Dec. 31, and further stated that “the Mediation Team may extend the Termination Date based on its assessment of the material progress of the Mediation but in no event shall extend the Termination Date beyond January 31, 2023, at 11:59 p.m. without this Court’s approval after notice of such proposed extension to parties in interest.”
On Sept. 29, the court granted in part and denied in part an oversight board motion to continue debt negotiations during litigation of certain gating issues, such as whether PREPA bondholders’ debt is a secured interest.
The judge ordered the oversight board “to file, by December 1, 2022, a proposed plan of adjustment that it believes could be confirmable, taking into account the litigation risk and economic issues that are in dispute.”
“The plan may, but is not required to, include alternative provisions addressing proposed resolutions contingent on different outcomes of the disputed issues,” read Swain’s order. “It must be accompanied by a disclosure statement (and corresponding motion for approval thereof) and proposed confirmation schedule contemplating a June 2023 confirmation hearing.”
The mediation team said that if the court delays the presentation of the PAD a week, it must be under certain conditions.
One of them is that the oversight board will promptly deliver to the Ad Hoc Group and the monolines, on a rolling basis, all of the information on which the oversight board has relied in formulating its current position in the ongoing plan negotiations, with such delivery to be completed by the close of business today Dec. 2. The mediators also asked that the oversight board’s professionals make themselves available to the Ad Hoc Group’s and the monolines’ professionals promptly to review such information and answer questions raised; that the oversight board engage in good faith negotiations during the extension; and that the omnibus hearing scheduled for Dec. 14 be held as scheduled.
“Given the importance of the deadline that the Court set, the Mediation Team makes this request reluctantly, but believes that the alternative of filing a plan on December 1, 2022 in the present context would be significantly less conducive to a negotiated resolution of this case,” the mediators said.