PREPA plan delayed again despite objections

The deadline for the Puerto Rico Oversight Board to submit a proposed Puerto Rico Electric Power Authority plan of adjustment was pushed back to Aug. 25 from Aug. 18.

U.S. District Court Judge Laura Taylor Swain postponed the date despite objections from bond insurer Assured Guaranty and bond holder GoldenTree Asset Management. According to the board, Syncora Guarantee objected to the delay, but didn’t file it with the court.

The extension was the fifth Swain granted for the submission of a proposed “third amended” plan of adjustment since mid-July. The board is trying to alter the plan to accommodate a deal with some bondholders. 

In addition to extending the plan deadline, Swain extended the deadline for an informative motion explaining the board’s position on the need for a supplemental disclosure statement and re-solicitation of votes on the plan to Aug. 25 from Aug. 18.

She also extended the deadline for a joint status report on proposed bankruptcy deadlines to Aug. 29 from Aug. 23. The board had asked for an extension to Aug. 30, but Swain moved it to noon on Aug. 29 so it could be discussed at the planned Aug. 30 Puerto Rico bankruptcy omnibus hearing.

The board said its advisors needed more time to finalize the revised plan. It also said in the last 10 days the board had reached an “agreement in principle with National Public Finance Guarantee to align its agreement with the projections in the 2023 PREPA fiscal plan.”

On Thursday evening GoldenTree said when Swain stayed the Ad Hoc Group of PREPA Bondholders’ motion to dismiss the bankruptcy on Sept. 29, 2022, she she requested “meaningful deadlines” to be established and said the board should submit a proposed plan of adjustment by Dec. 1, 2022. Nearly 11 months later the board has “disregarded” the original timetable, GoldenTree said.

The plan’s separate treatment of bondholders will make the plan unconfirmable under multiple sections of the bankruptcy code, GoldenTree said.

The continued delay leads to “massive” prejudice and injury to bondholders, GoldenTree said in asking Swain to deny the board motion for more time and, instead, to hold a status conference to discuss a “path forward.”

Assured Guaranty filed a statement objecting to the extension request and saying it shared in GoldenTree’s concerns.

Also on Thursday, the Ad Hoc Group of PREPA Bondholders filed a statement of its holdings say its members held $3.6 billion of uninsured PREPA bonds as of the middle of August. This is down from the $3.9 billion it held in late February.