Unsecured creditors, PREPA retirees oppose extending debt deal talks further
By The Star Staff
The Unsecured Creditors Committee (UCC) and Puerto Rico Electric Power Authority Retirement System (PREPA-SREAEE) objected Thursday to the extension of negotiations toward a new debt deal for PREPA, arguing that contrary to statements made to the court, they have not participated in the mediation.
The Financial Oversight and Management Board this week requested an extension of mediation talks to Aug. 15. PREPA’s retirement system denied remarks made by the oversight board to the effect that that the mediation team and the board have started engaging with the attorneys for, and are formulating proposals for each of, PREPA’s remaining unions, SREAEE, the UCC, and the Fuel Line Lenders, each in coordination with the mediation team, and will continue to engage with all mediation parties in coordination with, and under the direction of the mediation team.
“While communications made in the Mediation Process are confidential, SREAEE and UTIER [PREPA’s main union] once again find that the Oversight Board’s representation allows them a limited space to at least defend their position by clarifying an integral aspect of the status of this Mediation Process that may be misrepresented to this Court,” the PREPA retirees said. “Upon the Court’s latest extension, entered on June 29, 2022, UTIER and SREAEE did not receive any communication from the Oversight Board or the Mediation team. On July 14, 2022, UTIER and SREAEE communicated with the Mediation Team hoping to obtain an update on the process. Nonetheless, it was not until July 26, 2022, five days before the deadline expired, that counsel for UTIER and SREAEE received a response and, subsequently, were approached by the Oversight Board to schedule a call for July 27, 2022.”
The UCC said it continues to support a mediation process that brings all parties to the negotiating table to attempt to reach a global settlement on an expedited timetable. “However, at no time during the last five years, and this includes the last three months of mediation, did the Committee receive a proposal from the Oversight Board regarding the plan treatment of PREPA’s general unsecured creditors,” the group said.
While PREPA bondholders are the largest claimholder constituency, their claims are inferior to those of PREPA’s general unsecured creditors because the PREPA bonds are non-recourse bonds secured only by certain very limited funds in specified accounts, or $8 million as of PREPA’s petition date, the UCC said, relying on a determination made by the court in another case.
“Therefore, in effect, the Oversight Board is allocating PREPA’s precious limited resources first to a group of inferior creditors, thereby risking that insufficient, or potentially no resources, remain to satisfy the superior claims of other PREPA creditors,” the UCC said.