Bonds

The Puerto Rico Electric Power Authority bankruptcy proceedings will not be paused despite a request from bond parties, U.S. District Court Judge Laura Taylor Swain said Monday.

Though the First Circuit Court of Appeals is considering how bond parties’ liens on PREPA’s revenues should be treated in the bankruptcy, Swain said regardless of that court’s ruling, there was a chance she could still approve the Puerto Rico Oversight Board proposed plan of adjustment. Further, “in the event of changes on appeal, the court is capable of adapting and reacting appropriately as necessary.”

While several bond parties earlier this month asked Swain to pause the proceedings until the appeals court decision, Swain said she had dismissed some arguments and others would be best addressed in a confirmation hearing scheduled to start March 5.  

U.S. District Judge Laura Taylor Swain said if the appeals court overturned parts of her lien decision she will adjust.

Swain said the bond parties did not mention that further appeals are possible, which would further delay the resumption of district court proceedings.

A request by bond parties on Dec. 22 for 30 extra days on the schedule was “substantially denied,” Swain said, and there hasn’t been a “change of circumstances” since then.

Granting the delay would impede progress for Puerto Rico’s electrical system, she said.

Puerto Rico Attorney John Mudd said Swain’s ruling was expected.

The bond parties making the request were Assured Guaranty Corp., Assured Guaranty Municipal Corp., PREPA Ad Hoc Group, GoldenTree Asset Management, Syncora Guarantee, and bond trustee U.S. Bank N.A.

“The Oversight Board will continue to work towards confirmation of the plan of adjustment to provide PREPA with an urgently needed path to end bankruptcy, remain a sustainable utility, and continue the transformation of Puerto Rico’s energy system to provide more reliable electricity,” the board said in a statement.

A spokesman for GoldenTree didn’t immediately respond to a request for a comment.

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