The restructuring of the more than $10 billion debt of the Puerto Rico Electric Power Authority (PREPA (AEE), or PREPA) remains paralyzed after more than a decade in court. The Financial Oversight and Management Board (JSF), representing the Puerto Rico government, and the bondholders cannot agree on how much is owed or under what conditions a judge would decide.
Another increase in electricity bills remains on the table, but no climate is seen for approving the agreements needed. Engineer and former board member Antonio Medina said bondholders claim full payment, about $12 billion with accrued interest, while the board holds their right to collect is limited to PREPA’s net revenues. Medina said high fuel costs and falling demand from solar panels leave PREPA’s margin minimal.
After an offer of about $2.6 billion, the board proposed an additional $3 billion deal in July, a third of the debt, but creditors did not back it. Of the Plan of Adjustment proposed in August 2023, 44% of bondholders subscribed and 56% opposed. Judge Laura Taylor Swain reserved her decision on confirmation.
Medina called it "a lost opportunity" and said she should issue a cramdown ruling. Attorney Zoé Negrón Comas, who has represented unions in the bankruptcy, said no plan is currently in the confirmation process, and that PREPA under LUMA Energy and Genera PR cannot provide service, a requirement for confirmation under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA).
Attorney John Mudd called the 2019 cancellation of the restructuring support agreement, which would have cut about 32% of the debt, "a government error." Negrón Comas said the board’s exit is far off. Part of the restructured debt is proposed to be paid through added or fixed charges on electric bills. Mudd said dismissing the case would end the automatic stay, letting creditors resume collection.