San Juan, PR – March 22, 2023 – The Financial Oversight and Management Board for Puerto Rico today issued the following statement:
The Oversight Board welcomes the decision by the U.S. District Court for the District of Puerto Rico on the Oversight Board’s challenge to the security interest and recourse claim by holders of bonds issued by the Puerto Rico Electric Power Authority (PREPA).
The litigation focused on whether the bondholders’ claims are limited to the money PREPA deposits in accounts established pursuant to the trust agreement governing the issuance of the bonds. The Court’s ruling upholds the Oversight Board’s position that the bondholders’ collateral security is limited to those funds. The Oversight Board is also pleased the Court rejected the bondholders’ contention that they have a general unsecured claim for the full amount of their principal and interest. The Court limited their unsecured claim to future net revenues for the remainder of the terms of the bonds.
In all, the Court’s decision is a significant win for Puerto Rico and its path to reliable electricity and economic growth.
The Oversight Board is still analyzing the decision in detail to determine the implications of bondholder’s remaining claim but will continue to work on resolving the remaining issues of PREPA’s debt restructuring consensually.