Stakeholders have until Wednesday to object to members of mediation team for new PREPA RSA
By The Star Staff
Puerto Rico Electric Power Authority (PREPA) stakeholders have until Wednesday to express directly to Judge Laura Taylor Swain, the judge overseeing the power utility’s bankruptcy case, via email their objections to the members of a mediation team that will seek to renegotiate a new restructuring support agreement (RSA).
On March 17, PREPA, through the Financial Oversight and Management Board and the Fiscal Agency and Financial Advisory Authority, informed the court that the Ad Hoc Group of PREPA bondholders, National, Assured, Syncora Guarantee Inc. (Syncora), the Electrical Industry and Irrigation Workers Union (UTIER by its Spanish acronym); PREPA’s Employees Retirement (SREAEE by its Spanish initials), the Official Committee of Unsecured Creditors and PREPA’s fuel line lenders had expressed support for a mediation process to renegotiate a new debt adjustment plan after the one negotiated in 2019 was canceled last month. That was after Swain had asked the parties to inquire whether mediation was possible to negotiate a new RSA for the power utility.
Swain on Friday announced that the court had designated a team of sitting federal judges who will be available to facilitate confidential negotiations regarding the formulation of a plan of adjustment for PREPA, including the consensual resolution of ancillary disputes.
The mediation team, she said, is led by Judge Shelley C. Chapman of the United States Bankruptcy Court for the Southern District of New York. Chapman is joined on the mediation team by Judge Robert D. Drain of the U.S. Bankruptcy Court for the Southern District of New York and Judge Brendan L. Shannon of the U.S. Bankruptcy Court for the District of Delaware.
“Each of these dedicated public servants has substantial judicial and other professional experience in complex financial matters, including insolvency proceedings, and will be designated, through the intercircuit assignment procedures of the Judicial Conference of the United States, to serve as a judicial mediator as needed in PREPA’s case,” Swain said. “The mediation process will be set forth in detail in a mediation terms and conditions order which the Court shall enter upon completion of the intercircuit assignment procedures.”
The mediation team will be authorized to retain the assistance of a financial advisory firm for its efforts.
The judge said the process will remain confidential even from her.
“In order to ensure the integrity of both the adjudicative process and the mediation process, the undersigned, as the judge presiding over the PREPA Title III case and related proceedings, will not participate in the mediation process and the mediators will not provide any information about the positions taken by parties, or the substance of the mediation process, to the undersigned,” Swain said. “The mediation process will remain confidential and separate from, and will proceed concurrently with, the adjudication of issues and proceedings in the PREPA Title III case.”
The judge said that any party in interest having an objection to the appointment of any member or members of the mediation team must write the objection to swaindprcorresp@nysd.uscourts.gov, no later than April 6 2022. Objections must not be filed on the public docket, she said. The objection must state the reason for the objection and provide all relevant supporting material, if any.
Gov. Pedro Pierluisi Urrutia in early March announced that his government was withdrawing from PREPA’s RSA because it would have resulted in an increase in electricity rates of 2.7 to 4.6 cents per kilowatt-hour for the next 47 years to pay off the utility’s debt. PREPA is in bankruptcy to restructure over $9 billion in debt.
Swain gave the island government until May to come up with a new RSA.