As PREPA plan deadline extended again, mediators accuse Oversight Board of dishonesty

Puerto Rico Electric Power Authority plan of adjustment mediators accused the Oversight Board of dishonesty and lack of cooperation in releasing key data Wednesday, just as the bankruptcy judge agreed to again extend the mediation to as late as Dec. 21.

When the mediation team asked for an earlier extension from Dec. 1 to Dec. 8, the team clearly directed that the board provide all relevant documents and data behind its PREPA negotiating position by the end of Dec. 2, Chief Mediator Shelley Chapman told bankruptcy Judge Laura Taylor Swain. Instead, documents continued to be delivered into the week of Dec. 5 to 10. On Dec. 10, “we thought we were finally done,” she said.

Then “critical data” was delivered to the mediators and involved parties very early Tuesday morning, Chapman said.

“It does appear to us, it’s not just a matter that this just happened and folks didn’t know it was there,” Chapman said. “I’m unwilling to accept that characterization … . We do believe they have to be held to account,” she said of the board.

“We believe what has been lacking here, along with the data itself, is an overall atmosphere of candor and cooperation,” Chapman said.

“I have to very respectfully disagree with Ms. Chapman,” Bienenstock said. He said the board did not fail to reveal any information or reply to any request. The mediators had requested the board release to the mediation parties all the information that the board had relied on in creating PREPA’s fiscal plan, budgets, and its negotiating position.

Bienenstock said the board did not rely on the just-released information as it did not know about it. The board found this data because of a recently made specific request.

“There can be no doubt, respectfully contrary to [Oversight Board Attorney Martin] Bienenstock’s observations, that the documents that emerged [Tuesday] … had been requested many times,” Chapman said.

Chapman said she and Bienenstock will “have to agree to disagree.” The mediators “made this request over and over again.”

Ad Hoc Group of PREPA Bondholders Attorney Amy Caton also said with regards to the history of requests for documents, Bienenstock “has his facts wrong.”

Swain said there were ongoing issues of “clarity, candor, and trust” that must be attended to, for the negotiations to make progress. She said the mediation’s parties must be more communicative to aid progress.

Swain said she believed it was in the best interest of the bankruptcy to grant the request for extension of the deadline for the board to submit a proposed plan of adjustment and related documents. She approved the board’s request to extend it to 11:59 p.m. AST, Friday with the option for the board to extend the deadline further to 11:59 p.m. AST, Dec. 21.

Bienenstock said the board has been asking the court for delays on submittal of its proposed plan of adjustment because some parties believe the mediation has a better chance of success without the submittal.  

On other PREPA-related matters at the hearing, Caton said the Ad Hoc Group of PREPA Bondholders had neither objected to nor endorsed the board’s request to extend deadlines for the plan of adjustment.

She said the board’s purpose in reaching a deal with the authority’s fuel line lenders at the start of December was to create an accepting impaired class that might be acceptable to Swain. She said the class will have to be reviewed later. According to the Puerto Rico Oversight, Management, and Economic Stability Act at least one class of creditors must vote to approve a deal for the court to approve a plan of adjustment.