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  • Writer's pictureThe San Juan Daily Star

Unsecured creditors seek to bar 2 fiscal board experts from estifying at PREPA hearing

David Skeel, chairman of the Financial Oversight and Management Board

By The Star Staff

As a Financial Oversight and Management Board (FOMB) expert report insisted upon its estimation that Puerto Rico Electric Power Authority (PREPA) bondholders’ net revenue claim is $2.1 billion, unsecured creditors want to stop two oversight board witnesses from testifying at a PREPA debt confirmation hearing next month.

On Monday, the oversight board submitted an amended report from expert David Plastino, principal at the Brattle Group and leader of Brattle’s Bankruptcy & Restructuring Practice, whose task was to estimate the bondholders’ unsecured net revenue claim.

Starting today, as part of the adversary proceeding FOMB v US Bank National Association, the federal Title III bankruptcy court will hold hearings on the estimation of the bonded debt claim following a ruling earlier this year in which U.S. District Court Judge Laura Taylor Swain decided that the bondholders do not have a lien over PREPA’s revenues.

Plastino estimated that the unsecured net revenue claim is $2.1 billion as of July 2, 2017, the Claim Estimation Date, an amount bondholders say is too low.

Meanwhile, the Unsecured Creditors Committee (UCC) in a June 2 motion asked the Title III court overseeing the PREPA bankruptcy to stop two oversight board witnesses from testifying about negotiations.

The UCC does not want the oversight board chairman, David Skeel, and board consultant David Brownstein, director of Citigroup Global Markets, to testify at PREPA’s confirmation hearings, slated for July 17, because they refused to be deposed on matters related to the bankruptcy citing mediation privilege.

The two refused to talk about the negotiations between the oversight board and National Public Finance Guarantee Corp. and the fuel line lenders, both of which settled their debt with PREPA.

“Brownstein conceded that he, along with the oversight board, might decide to testify at the confirmation hearing on the very same issues that he refused to answer during his deposition based on a claim of mediation privilege,” the UCC argued. “Neither the oversight board nor its witnesses may invoke a privilege as both a shield and a sword.”

The request was published in PREPA’s bankruptcy case.

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