Unsecured PREPA creditors reject bondholders’ expense claim

By The Star Staff

Unsecured creditors of the Puerto Rico Electric Power Authority (PREPA) have joined the utility in its motion to dismiss a $3.7 billion administrative expense claim made by bondholders. The move represents a significant development in the ongoing financial disputes surrounding the island utility, which has been under bankruptcy protection since 2017 to restructure almost $10 billion in debt.

Bondholders argued in a motion last week that the expense claim is valid because PREPA allegedly used $3.7 billion worth of their collateral during the bankruptcy proceedings. In response, PREPA asserts that the bondholders have no valid claim, and even if they did, it would be limited to net revenues that they are already receiving.

Several creditors, government entities, and civil associations have filed motions for joinder alongside PREPA, including the Unsecured Creditors Committee and the Puerto Rico Fiscal Agency and Financial Advisory Authority, among others. The outcome of this legal dispute could have significant implications for PREPA’s restructuring efforts and the future of the Puerto Rican energy sector.

As the situation unfolds, stakeholders are eager to see how the court will rule on the motion to dismiss and the impact it may have on the utility’s financial future. Resolving the matter will be crucial in determining the path forward for PREPA and the broader island economy.

Meanwhile, an array of environmental, social and small business organizations, private schools and professional associations have filed motions in federal court opposing the PREPA bondholders’ lawsuit, which they contend threatens to lead to further price increases and reduce the resources available for repairs to the electrical system.