Swain yet to rule on request to move PREPA debt plan confirmation hearing to October

By THE STAR STAFF

The judge overseeing the Puerto Rico Electric Power Authority (PREPA) bankruptcy did not rule Wednesday on a petition by the Financial Oversight and Management Board to schedule the confirmation hearing for PREPA’s debt adjustment plan for October.

At a hearing, U.S. District Judge Laura Taylor Swain appeared skeptical of the October confirmation but ordered the oversight board to file the third amended debt adjustment plan by mid-July and to put documents in a data repository by June 30.

The utility’s bondholders, meanwhile, had said they plan to ask the Title III court to dismiss the bankruptcy case.

PREPA’s confirmation hearing, which was scheduled to begin July 17, had to be delayed after the oversight board announced it would amend the debt adjustment plan to cut the debt, arguing that new information showed PREPA expected lower revenues than previously anticipated.

After the oversight board proposed to cut PREPA’s debt to $2.3 billion, the judge this week ruled that bondholders’ net revenues were exactly $2.3 billion.

Bondholders plan to ask Swain to revive an adversary proceeding that would seek to dismiss the case so they can appoint a receiver, according to a June 27 document.

Even if the judge denies that forthcoming motion, bondholders are asking her to allow appeals of her orders that the $8.4 billion in outstanding bonds are virtually unsecured and that the claim isn’t for the face value of the debt. Those appeals are currently allowed only after plan confirmation. However, they will likely render the plan unconfirmable if reversed, and so the plan, even if confirmed, couldn’t take effect until after the appeals were heard.

Swain made remarks at Wednesday’s hearing that showed she was not inclined to allow for an appeal, citing the impact of extending the bankruptcy longer.

The bondholders are also seeking a longer confirmation schedule.