A federal judge has ordered a fresh round of mediation talks aimed at restructuring more than US$8 billion in debt held by Puerto Rico’s power company as it struggles to recover from Hurricane Fiona.
In addition, US District Court Judge Laura Taylor Swain allowed a federal control board that oversees the island’s finances to go to court to determine how much money bondholders should receive as they seek to recover their investments.
The board warned earlier that any expenses linked to debt repayment would be passed along to the power company’s 1.47 million clients.
The board also was ordered to file a debt-restructuring plan for the island’s Electric Power Authority by December 1, with a confirmation hearing scheduled for mid-2023.
The board praised the ruling in a brief statement, saying it is calculated to get major disputed legal issues resolved in the shortest possible time: “Simultaneous litigation and mediation facilitates resolutions for all constituencies.”
The ruling comes as more than 300,000 customers were without power two weeks after Fiona slammed into Puerto Rico’s southwest tip as a Category 1 storm, sparking an islandwide blackout.
“It is totally unacceptable,” said Manuel Calder?n Cerame, spokesman for the main opposition Popular Democratic Party.
Fuel disruptions have forced grocery stores, gas stations, and other businesses to temporarily close as the demand for diesel to feed generators grows. Hundreds of schools also remain shuttered.
Government officials had vowed to try and restore power to 91 per cent of clients by Friday as they push to restructure the power company’s debt. Up to Wednesday night, power had been restored to 80 per cent of customers.
In early March, Pierluisi had announced that his administration was scrapping a proposed debt-restructuring deal because it was not favourable to the island’s economy or the power company’s clients.
Then on September 16, officials announced that mediation talks had failed. In response, a bondholder group that holds or insures 65 per cent of the power company’s debt sought to have the bankruptcy case dismissed and a receiver appointed.
Last Wednesday, the judge denied their request.
A spokesman for the bondholder group did not immediately respond to a message for comment.
The power company holds the largest debt of any of Puerto Rico’s government agencies, and it is one of two agencies whose debt has not yet been restructured more than five years after the United States territory filed for the largest municipal bankruptcy in history.
Puerto Rico’s Highways and Transportation Authority still holds US$5.8 billion in debt.