Judge Prolongs Litigation Stay in Puerto Rico Utility Bankruptcy
(Bloomberg) -- The judge overseeing the bankruptcy of Puerto Rico’s electric utility extended the halt on litigation connected to the case as the government-run power company negotiates with bondholders over how to cut its debts.
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US District Court Judge Laura Taylor Swain kept the stay in place through Nov. 13 and again directed the parties, including principal members, to participate in restructuring negotiations, according to a court filing Monday. This is the second time that Swain has granted the mediation team’s request to postpone lifting the stay.
Talks between the parties have been ongoing, the mediation team wrote in a court filing Monday, asking for the extension.
Puerto Rico’s Electric Power Authority, known as Prepa, wants to reduce $10 billion of bond debt and other obligations through its bankruptcy, which has been dragging on for seven years. The US Court of Appeals for the First Circuit in June determined bondholders’ allowable claims to be about $8.5 billion. That’s higher than the $2.4 billion limit that Swain had placed on their unsecured lien on Prepa’s revenue.
The parties are waiting to see if the appeals court will grant a request from Puerto Rico’s financial oversight board — which is in charge of the utility’s bankruptcy — to conduct a rehearing of the appeallate court’s decision.
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