San Juan, PR – March 16, 2026 – The Financial Oversight and Management Board for Puerto Rico today issued the following statement:
The Oversight Board welcomes the decision of the U.S. District Court for the District of Puerto Rico denying a motion by certain Puerto Rico Electric Power Authority (PREPA) bondholders seeking administrative expense priority claims of at least $3.7 billion in the PREPA debt restructuring under Title III of PROMESA.
U.S. District Court Judge Laura Taylor Swain concluded that the bondholders’ administrative expense claim fails as a matter of law – that is: the facts and the law support the Oversight Board’s position – and none of the legal theories advanced in the bondholders’ motion provides a valid basis for administrative priority.
The Oversight Board believes the Court’s decision appropriately applies the statutory framework governing Title III cases under PROMESA and reinforces the principle that administrative expense priority is subject to stringent requirements.
The Court’s ruling removes a significant obstacle to confirmation of the Oversight Board’s proposed Plan of Adjustment to reduce PREPA’s debt and end PREPA’s Title III restructuring. The Oversight Board hopes the PREPA debt restructuring can move forward expeditiously and in the interest of the people of Puerto Rico.
Bondholders claim that the total amount owed by PREPA on their bonds is over $11 billion (including approximately $8.5 billion of principal and interest that accrued prior to PREPA’s Title III case). The First Circuit ruled in 2024 that PREPA bondholders only collateral is PREPA’s Net Revenues, and the Oversight Board believes PREPA’s infrastructure is so deteriorated that the costs of maintenance and operation of Puerto Rico’s electric system leave little or no Net Revenues in excess of necessary expenses. The First Circuit did not determine the value of the bondholders’ recovery on their claim. The currently proposed Plan of Adjustment provides up to $2.6 billion to be paid to satisfy the claims of all PREPA creditors, including the bondholders.