Feldesman Senior Counsel Phillip A. Escoriaza was quoted in the January 23, 2024 edition of The Bond Buyer regarding the recent court ruling against Puerto Rico Electric Power Authority (PREPA) bondholders. The United States Court of Appeals for the First Circuit upheld a District Court of Puerto Rico’s decision refusing to lift the bankruptcy stay, preventing bondholders from pursuing the ultimate goal of appointing a receiver for PREPA.

When asked about the Court of Appeals decision, Mr. Escoriaza explained it was PREPA bondholders’ latest effort to take the bankrupt utility out of the debt adjustment process, a proceeding similar to court-supervised bankruptcy that Congress created for territories and their public entities burdened by unsustainable debt service payments.  In his view, holders of PREPA bonds hope that lifting the stay will permit the appointment of a receiver who would in turn increase electricity rates in Puerto Rico to boost revenue and generate more dollars for debt payments to bondholders.  PREPA defaulted on its bonds in 2017 and entered the debt adjustment process under a 2016 law known as PROMESA.

We appreciate the opportunity for Mr. Escoriaza to share his insights in The Bond Buyer about breaking news in Puerto Rico’s unprecedented government-wide debt defaults and bankruptcy, including PREPA. The Bond Buyer is a national trade publication covering the municipal bond industry. Please click here to read the entire article.