PREPA, project developers litigate discovery over $1 billion in disputed lost profits.

U.S. Magistrate Judge Judith Dein 

By THE STAR STAFF

The long‑running bankruptcy proceedings of the Puerto Rico Electric Power Authority (PREPA) advanced this week as the Financial Oversight and Management Board and several renewable-energy companies submitted sharply divergent proposals for a discovery schedule that will govern the litigation of nearly $1 billion in disputed lost‑profits claims.

The competing proposals, filed as part of a joint status report ordered by U.S. Magistrate Judge Judith Dein, underscore how far apart the parties remain more than two years after PREPA first objected to the claims.

The conflict traces back to Nov. 11, 2023, when PREPA filed its Six Hundred Twenty-Fifth Omnibus Objection, challenging lost‑profits claims filed by the developers of several solar and renewable‑energy projects whose power purchase and operating agreements (PPOAs) were never brought into service.

PREPA argued at the time that the claims were contractually barred, inadequately supported, or too speculative to be allowed. After a series of procedural steps, the court held a hearing in December 2025, issuing a ruling that partially overruled PREPA’s legal objections and directed the parties to meet and confer about next steps.

While the court resolved key legal issues, it left fact-intensive questions -- such as causation, termination, and the sufficiency of each claimant’s damages model -- to be resolved through discovery.

On Jan. 23 of this year, the court referred pre‑trial management of the disputes to Dein, who instructed the parties to negotiate a discovery plan aimed at allowing renewed claim objections to be heard at the September 2026 omnibus hearing.

Those talks quickly stalled. PREPA’s oversight board, Elam LLC, GS Fajardo Solar, M Solar Generating and YFN Yabucoa submitted separate status reports on Feb. 17-18, each proposing different timelines and sharply different views on whether extensive discovery is necessary.

At a Feb. 20 hearing, Dein ordered the parties to attempt once more to produce a joint schedule. They again failed, and the newly filed status report presents three competing frameworks rather than one unified proposal.

The oversight board argues that the magnitude of the claims -- some $965 million in alleged lost profits -- requires comprehensive fact and expert discovery. The board contends the claimants’ calculations rely on long-term revenue projections unsupported by the necessary inputs, such as capital expenditures, operating costs, mitigation efforts and discounting methods. It proposes a months‑long process culminating in cross-motions, depositions, expert analysis and evidentiary development through the summer.

Elam LLC’s filing -- spanning more than a dozen pages -- accuses the oversight board of attempting to restart the case from scratch and overlooking materials already in its possession.

Elam argues that many of the documents the board seeks were created by PREPA, transmitted to the board years ago, or are already filed on the bankruptcy docket.

Elam proposes a sequenced discovery framework requiring the oversight board to first review and produce all materials already in its possession before seeking anything from claimants. It argues that a narrower set of factual issues applies to its claim because the court already resolved the only legal objection raised against it.

Elam believes its claim could be resolved far more quickly than others and suggests a discovery process concluding by late July 2026.

The other three claimants -- GS Fajardo Solar, M Solar Generating, and YFN Yabucoa -- accuse the oversight board of “procrastinating” and disregarding Dein’s Feb. 20 order.

They emphasize that their proofs of claim already include detailed lost‑profit analyses, including critical project reports prepared under the oversight board‑supervised PROMESA revitalization process. The companies argue that PREPA already holds any documents related to contract termination and that discovery can conclude no later than early July -- well ahead of the board’s proposed timeline.

What comes next

Because the parties failed to submit a unified proposal, Dein will now determine how discovery will proceed.

Elam has requested a status conference around April 24 to keep the process on track.