Judge extends litigation stay in Puerto Rico utility bankruptcy

The judge overseeing the bankruptcy for Puerto Rico’s government-owned electric utility continued a pause on litigation related to the case as the power provider and its creditors negotiate a possible debt-cutting deal. 

U.S. District Court Judge Laura Taylor Swain extended for an additional 30 days the litigation stay through Oct. 8 and ordered the parties to meet during that time, according to a court filing Thursday. The mediation team overseeing the debt-restructuring negotiations requested the additional time after holding multiple in-person talks with the parties. 

“In order to continue these discussions, which are ongoing at this time, the mediation team requests that this court extend the litigation stay imposed by the stay order,” the mediation team wrote in its court filing Thursday.

The Puerto Rico Electric Power Authority is trying to reduce $10 billion of bonds and other obligations through its seven-year bankruptcy. The U.S. Court of Appeals for the First Circuit in June pegged bondholders’ allowable claims to about $8.5 billion — far higher than the $2.4 billion ceiling that Swain had place on their unsecured lien on the utility’s net revenue. The financial oversight board that’s managing PREPA’s bankruptcy has asked the appeals court for a rehearing on that decision.