San Juan- Robert Mujica said Wednesday that it is unlikely Puerto Rico’s long-running bankruptcy case involving the Puerto Rico Electric Power Authority will be resolved this year due to continued litigation from bondholders seeking full repayment of approximately $12 billion in debt.
Speaking during a public meeting of the Fiscal Oversight Board, Mujica stated that the Board continues working with the mediation team overseeing PREPA’s Title III bankruptcy proceedings and still believes a negotiated resolution remains possible.
However, he said ongoing legal actions by bondholders demanding full recovery without proposing alternative restructuring paths continue to delay progress.
“Given the continued litigation by bondholders for full recovery of $12 billion without proposing a path forward beyond that litigation, it is unlikely the PREPA bankruptcy will be resolved this year,” Mujica said.
Mujica added that a recent federal court ruling regarding administrative expense claims represented a victory for the Fiscal Oversight Board, although certain bondholders have already appealed the decision.
According to the Board executive director, the next major stage should focus on litigation to determine the value of the bondholders’ collateral and the allowable amount of secured claims.
“That is the path toward a resolution that reflects Puerto Rico’s fiscal and economic reality,” he stated.
Mujica also noted that the Board succeeded in limiting bondholders’ discovery requests after they sought extensive historical accounting records, federal reimbursement fund documents and additional financial materials related to PREPA.
The federal court rejected much of the broader request and established a limited discovery schedule extending summary judgment filings through November.
During the meeting, Mujica also discussed Puerto Rico’s tax revenues, permitting reform efforts, student-based school budgeting and proposed regulations tied to public employee compensation.
He noted that General Fund revenues during the second quarter came in slightly above Fiscal Plan projections, although still below collections from the same period last year.
On permitting reform, Mujica said discussions continue before the Legislature and expressed optimism that a meaningful permanent reform package could eventually be approved.
“Every year permitting reform is delayed is a year of investment that does not arrive, jobs that are not created and economic activity that does not materialize,” he said.
