PREPA bondholders ask appeals court to lift stay

Puerto Rico Electric Power Authority bondholders argued Wednesday the stay that prevents them from exercising authority over the utility has lasted longer than others the court has found “immoderate” and should therefore be lifted. 

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The bondholders were responding to the First Circuit Court of Appeals order earlier this month that they show cause as to why their request to lift the stay shouldn’t be dismissed. 

Bondholders have sought relief from the stay from the early days of the bankruptcy in summer 2017 and the latest effort has gone on for four years, they told the appeals court. 

“The district court’s multi-year stay of litigation far exceeds those delays that this court has previously found to be final, appealable orders,” the bondholders said, adding the district court instead chose “piecemeal merits proceedings that will not resolve the question whether the automatic stay should be lifted or whether the bondholders have adequate protection.”

The district court stymied “relief while, at the same time, holding that the bondholders cannot recover as an administrative expense any compensation for the dissipation of their collateral,” the bondholders said. 

“The stay that has stymied these proceedings for years far outstrips the shorter delays that this court has previously found immoderate,” the bondholders said. 

The bondholders said the three cases the appeals court asked them to address don’t mean the appeals court shouldn’t review their request for a lift stay.

In past filings the bondholders suggested if the bankruptcy’s stay on pursuing actions under the bond trust agreement was lifted, they could petition a local Puerto Rico court to allow them to appoint a receiver who would be a better steward for the authority. 

The case is National Public Finance Guarantee, et al. v. The Financial Oversight and Management Board for Puerto Rico, as representative for the Puerto Rico Electric Power Authority. 

The case was appealed after a district court ruling in June.

The Oversight Board didn’t immediately respond to a request for a comment. 

The bond parties in the case are the PREPA Ad Hoc Group, GoldenTree Asset Management, Syncora Guarantee, Assured Guaranty, National Public Finance Guarantee Corp., the Majority Member PREPA Ad Hoc Group, and U.S. Bank, N.A., in its capacity as the PREPA bond trustee.