Mediators say there is nothing meaningful left to mediate
The mediation process seeking a settlement in the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy has effectively come to a halt.
In its Twenty-Third Notice and Report, filed August 17, 2026, the court-appointed Mediation Team, whose mandate runs through October 31, delivered its most blunt assessment yet, acknowledging that negotiations have stalled, litigation is dominating the landscape, and the Financial Oversight and Management Board’s (FOMB) instability continues to cast a shadow over any path forward.
In the report, the mediators, Retired Judge Shelley C. Chapman and Judge Brendan L. Shannon, all concede that there is nothing meaningful left for them to mediate, noting that they have paused the services of PJT Partners, the firm hired as financial adviser.
“In light of the foregoing, the Mediation Team reluctantly informs the Court that, effective August 16, 2026, it has paused PJT’s services, without prejudice to its right to lift the Pause at a future date. The Mediation Team is grateful to PJT for its thoughtful work and dedication to achieving a resolution for PREPA, its stakeholders, and most importantly, the people of Puerto Rico. Unfortunately, there is little for PJT to do in the current circumstances,” the mediators said.
The report notes that PREPA’s Title III case remains mired in multiple active litigation tracks, including the appeal of the Administrative Expense Claim Decision, with oral argument scheduled for September 15 before the First Circuit, and a discovery and summary-judgment schedule extending into November.
The Mediation Team warns that rulings in these matters are likely to be appealed, further extending the uncertainty.
Compounding the gridlock is the unresolved composition of the Financial Oversight and Management Board. Since October 2025, the Board has operated with only four members after attempts to remove members led to litigation and a preliminary injunction.
The mediators state that “uncertainty regarding the composition of the Oversight Board remains,” and they add that it appears likely to continue. The Board has not certified a fiscal plan for 2026, has not retained a restructuring advisor since BGC Partners Advisory’s engagement ended in September 2025, and has not filed an amended plan of adjustment.
A $3 billion proposed settlement unveiled on June 30 failed to gain bondholder support, leaving negotiations dormant.
With no apparent path to resume negotiations, no restructuring advisor, no fiscal plan, and a Board operating under unresolved legal challenges, the mediators’ message appears unmistakable: the PREPA restructuring process is effectively frozen until external developments break the deadlock.
The report offers no indication that substantive negotiations are underway or imminent before the Mediation Team’s mandate expires October 31.
FOMB Executive Director Robert Mujica insisted the Board will resolve PREPA’s bankruptcy but did not provide a specific solution to the stalemate.
