The Puerto Rico Electric Power Authority (PREPA) bankruptcy process is entering a new phase, with bondholders and the Financial Oversight and Management Board presenting divergent accounting theories to a US District Court. The bondholders, led by US Bank National Association and including major investors like Assured Guaranty and GoldenTree Asset Management, are seeking a declaration that their lien attaches to all net revenues PREPA has generated since 2017, totaling at least $2.85 billion.
They claim PREPA diverted pledged revenues to cover subsidies, administrative costs, and capital projects, violating the 1974 Trust Agreement and federal bankruptcy protections. The creditors are also seeking the transfer of roughly $1 billion in liquid cash currently held in PREPA accounts. The outcome of this dispute will shape the size of the collateral pool available to bondholders and influence the structure of any future debt restructuring.
The bondholders hold $8.3 billion in legacy revenue bonds, and the court’s decision will determine how much of PREPA’s cash belongs to them.