Puerto Rico Board Firings Entangle Prepa Bankruptcy Dispute | Company Business News
(Bloomberg) — The upheaval of Puerto Rico’s financial oversight board is slowing down the bankruptcy of its power utility as the judge overseeing the case suspended a near-term filing deadline and asked for a status update on the board’s membership.
The White House last week fired five of the seven members of the federal watchdog that monitors the commonwealth’s finances and manages the ongoing bankruptcy of Puerto Rico’s Electric Power Authority, called Prepa. The board must submit a report detailing how those firings may affect Prepa’s bankruptcy process by Aug. 25.
US District Court Judge Laura Taylor Swain wants a report “concerning the status of its membership and what effect, if any, the recent events will have on its participation in matters pending before the court,” according to the order.
The US territory has some of the most expensive and least reliable energy in the country. The government-owned power utility, which has been in bankruptcy since 2017, is seeking to restructure nearly $9 billion of bonds and loans down to $2.6 billion of new debt.
Before Swain can hold a confirmation hearing on that restructuring proposal, the court must resolve the claim made by some creditors that Prepa failed to direct about $3 billion of net revenue over several years to reserve accounts for debt repayment.
Swain also suspended an Aug. 18 deadline to exchange position papers with Prepa bondholders regarding the dispute over the $3 billion of net revenue. The suspension will further hamper the process of resolving the debate over Prepa’s revenue.
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