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  • Writer's pictureThe San Juan Daily Star

PREPA files new debt deal as judge denies extending schedule for confirmation

U.S. District Judge Laura Taylor Swain

By The Star Staff

The federal judge overseeing the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy, Laura Taylor Swain, has denied a bondholders’ motion to extend deadlines leading to the confirmation of PREPA’s debt deal, whose new version was filed last week.

The Financial Oversight and Management Board, which represents PREPA in its bankruptcy, filed yet another Fourth Amended Plan of Adjustment to include the debt settlement reached with the Official Committee of Unsecured Creditors on Dec. 18. As before, the debt deal contains 18 classes of debtors.

The plan of adjustment included provisions creating a GUC Trust Board comprising three members to be appointed to manage all matters related to unsecured creditors, including a GUC Trust created to distribute proceeds of the settlement.

The Unsecured Creditors Committee (UCC) and the oversight board reached a settlement on PREPA payments that would give the UCC a fixed payment of $335 million, the avoidance action proceeds, up to another $300 million if bondholder claims are reduced by the court, as well as other considerations. In exchange, the UCC agreed to support the plan and drop an adversary proceeding arguing that its claims were superior to those of bondholders, which Swain ruled have only a $2.4 billion unsecured claim on their $8.3 billion in outstanding debt.

Last Thursday, Swain denied bondholders’ motion to extend deadlines to allow additional discovery after PREPA reached a deal with general unsecured creditors.

Some of the bondholders, such as Assured Guaranty, GoldenTree Asset Management, Syncora Guarantee, the PREPA ad hoc group and the PREPA bond trustee had asked for an extension to conduct discovery into the UCC settlement.

Swain ruled that the issues that bondholders say require resolicitation of votes are not ripe for adjudication on the current record because the oversight board could be correct in its assertions that no creditors are adversely affected by the deal.

Stakeholders have 28 days to object to the changes after the newest plan was filed, which is sufficient time ahead of the March 4 hearing, she said. Additional fact discovery can also be accomplished without a delay of the hearing date, the judge said. She also noted that additional expert discovery may not be needed.

“With respect to fact discovery, the general kinds of information sought by movants do not appear, based upon the limited arguments presented by movants, to require wholesale reconsideration of the current litigation schedule,” she said.

At the same time, the general objections to additional discovery proffered by the oversight board are not sufficient to demonstrate that no additional discovery is warranted, Swain added.

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