Judge grants a 3rd extension for PREPA debt deal talks
By The Star Staff
The judge overseeing the island’s bankruptcy cases under Title III of the Puerto Rico Oversight, Management and Economic Stability Act, generally known as PROMESA, has granted another extension, the third, for stakeholders to reach a debt deal on the Puerto Rico Electric Power Authority’s (PREPA) $9 billion debt.
U.S. District Court Judge Laura Taylor Swain in a ruling late last week overruled the objections raised against a request from a team of mediators trying to negotiate a debt deal. The mediators and the Financial Oversight and Management Board said they needed more time to reach a settlement.
PREPA’s retirement system (SREAEE by its Spanish initials) and the Unsecured Creditors Committee had objected to the continuation of the mediation, arguing that, among other things, despite their sustaining large debt loads, the mediators have not included them in the talks. The SREAEE noted that the mediators have not invited UTIER, the Electrical Industry and Irrigation Workers Union, to the negotiations.
The court, nonetheless, dismissed the objections and approved the third extension to Aug. 15 for the parties to inform the court whether they have reached a debt deal or not. Upon request, the deadline can be extended to September.
Once the deadline is reached, the parties must inform the court the plan of adjustment, or term sheet for a plan of adjustment, or a litigation schedule, or a declaration and memorandum of law showing cause as to why the court should not consider dismissal of PREPA’s Title III case.
“The Court is mindful that settlement discussions have not progressed with a speed commensurate with the original desired timetable of all parties and the Court,” the judge said. “The Court also recognizes that the Committee, UTIER, and SREAEE have not, since the previous extension, been involved to the extent they expected. In its reply in support of the notice and request, the Mediation Team acknowledges and addresses these understandable concerns and recognizes that some parties are legitimately frustrated.”
That said, Swain said, the mediation team notes that the oversight board’s latest proposal reflects substantial progress and that it is crucial to continue the mediation process.
“The Court is encouraged by the Oversight Board’s representations that it is formulating proposals for discussion with the Mediation Parties and that it is working with the Mediation Team to set up a mediation session with UTIER and SREAEE during the requested extension period,” the judge said. “The Oversight Board has also indicated that negotiations with the Bondholders will affect any proposals to the Committee, UTIER, and SREAEE.”
“In light of the Mediation Team’s statement that the mediation process has resulted in substantial progress, and in light of the Oversight Board’s representations, the Court will not order the commencement of litigation at this juncture,” Swain said. “Therefore, the Objections are overruled.”