The judge in the Puerto Rico Electric Power Authority bankruptcy rejected five bondholder arguments Tuesday, bringing approval of the Oversight Board’s plan of adjustment closer.
U.S. District Judge Laura Taylor Swain granted the Oversight Board’s motion to dismiss the bond parties’ — bond trustee U.S. Bank N.A., Assured Guaranty, Syncora Guarantee and the now defunct Ad Hoc Group of PREPA Bondholders — five remaining counterclaims from a 2019 adversary proceeding. Some of the Ad Hoc group’s members — like GoldenTree Asset Management — are actively working against the board’s proposed plan of adjustment.
One attorney not involved in the case was not surprised by the ruling, noting Swain consistently rules against bondholders.
The timing of the ruling is “interesting,” said Puerto Rico Clearinghouse Principal Cate Long, coming “just days before the First Circuit [Court of Appeals] hears oral argument on GoldenTree’s lift stay” motion.
The bond parties claimed PREPA was in breach of its obligations to increase rates so that its revenues were sufficient to pay bondholders. Swain said the authority is not required to raise rates to pay
