Mediators for the Puerto Rico Electric Power Authority on Thursday asked bankruptcy judge Laura Taylor Swain for another month extension in the mediation, which would bring it to Aug. 1.
Swain told all parties to respond to the proposed extension by noon Monday.
When Gov. Pedro Pierluisi ended the last restructuring deal (Restructuring Support Agreement), in early March, Swain asked for quick action to negotiate a new one, with a proposed plan of adjustment due by May 2. Soon thereafter, she changed the filing goal to June 1.
In late May, the mediators with the consent of most participating parties, asked for an extension to July 1.
By the set deadline, the parties need to submit a proposed plan of adjustment, a term sheet for the plan, a litigation schedule, or a “declaration and memorandum of law showing cause why the court should not consider dismissal of PREPA’s Title III case.”
Title III of the Puerto Rico Oversight, Management, and Economic Stability Act is the part of U.S. law guiding the PREPA bankruptcy.
On Friday morning, the board filed an “urgent motion” in favor of the extension. The board’s attorneys said the extension is supported by the Puerto Rico Fiscal Agency and Financial Advisory Authority, the Ad Hoc Group of PREPA Bondholders, National Public Finance Guarantee, Assured Guaranty Corp., Assured Guaranty Municipal Corp., and the PREPA fuel line lenders.
The board said the position of Syncora Guarantee, the UTIER union, and the PREPA retirement system on the request was unclear. It said the Unsecured Creditors Committee opposes the request.
National, Assured, and Syncora insure some of PREPA’s bonds.
The attempt to handle the matter in mediation is an attempt to avoid the “distraction and costs of litigation,” the board’s attorney said.
About $8 billion of PREPA bonds and roughly $1 billion more of non-bond debt are outstanding. The PREPA bondholder group controls substantially more than half of the PREPA bond par outstanding.
PREPA has been in a bankruptcy process guided by Title III of PROMESA since mid-2017. Talks about restructuring the bonds go back to mid-2015.
In late May, the PREPA bondholders’ group threatened to abandon mediation and litigate if the current round of talks did not yield an acceptable result. If litigation were necessary, they said they would seek full bond repayment.