Division of creditors
In March, Judge Swain dealt a blow to bondholders when she ruled that they only had a secured claim to about $16 million that Prepa had already deposited in reserve accounts. In June, it granted them the right to the utility’s $2.38bn of net revenue, a limited portion of the nearly $9bn in bonds and loans that Prepa owed when it entered bankruptcy.
These court rulings split the original dedicated bondholder group represented by Kramer Levin Naftalis & Frankel, which has now been dissolved.
In May, BlackRock hired law firm Paul, Weiss, Rifkind, Wharton & Garrison to help restructure some of PREPA’s bonds, according to court documents. Nufin and other companies joined BlackRock earlier this month.
For its part, Golden Tree Asset Management, which has $835m in debt to Prepa as of Aug. 14, claims it was excluded from bondholders’ negotiations and said it would seek to appeal the board’s current proposal.
Invesco Advisors, which has $604 million in debt as of Aug. 14, was a former member of the Kramer Levin Group and has refused to join BlackRock or Golden Tree’s attempt to file a lawsuit, according to court documents.
Dominique Federico, CEO of Assured Guaranty, called the board’s current presentation during the Aug. 9 earnings call an “insult.” He said the insurance company is seeking litigation. The company had $446 million in net debt owed by Prepa, as of March 31.
2023-08-27 18:07:57
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