Creditors Warn Bankruptcy Drift Is Deepening Grid Crisis
A group of Puerto Rico Electric Power Authority (PREPA) bondholders issued a sharply worded statement on Tuesday accusing the Financial Oversight and Management Board (FOMB) of advancing an “unworkable” new proposal that would prolong the utility’s decade‑long bankruptcy and further destabilize Puerto Rico’s energy system.
The FOMB recently published a $3 billion settlement offer made to creditors.
The bondholders argued that the Oversight Board’s latest mediation offer — a brief, two‑paragraph outline that would pay less than a quarter of the accreted bond claim — disregards both PREPA’s revenue‑generating capacity and the legal rights affirmed by the First Circuit Court of Appeals. That 2024 ruling strengthened bondholders’ position by confirming that their claims are secured by PREPA’s net revenues, including principal and interest.
According to the statement, PREPA’s continued bankruptcy has blocked access to capital markets and private financing at a moment when the utility urgently needs investment to stabilize and modernize its aging grid. The bondholders also pointed to more than $12 billion in federal reconstruction funds that remain largely unused while PREPA remains under Title III protection. They argue that the prolonged restructuring has contributed to worsening system conditions, undermining reliability, public safety, and Puerto Rico’s broader economic prospects.
The group said it attempted to engage with the Oversight Board to understand the basis of the proposal but received no response. Instead, the FOMB published the proposal publicly, a move the bondholders describe as an effort to create the appearance of constructive engagement before the federal court and the President of the United States, who appoints and can remove board members.
Despite the impasse, the bondholders reiterated that they remain prepared to lead a swift and orderly exit from bankruptcy. They said that the Oversight Board’s current strategy offers no viable path toward resolution and risks further deterioration of the island’s energy infrastructure.
The coin, timed to the 250th anniversary of independence, revives a legal fight over putting a sitting president’s face on US currency.
The U.S. Consumer Price Index (CPI) eased by seven-tenths of a percentage point to 3.5% in June, following a decline in energy prices. The reading came in below analysts’ forecast of 3.7%, who had already anticipated a moderation in inflation after fuel prices surged amid the conflict with Iran. Core inflation, which excludes the volatile […]
A dozen mayors press Congress and federal agencies this week, with roughly $24 billion in disaster recovery funds still undisbursed.
