Puerto Rico’s bankrupt public electric utility, which powers most of the island, faces a Dec. 1 deadline to file a debt-cutting proposal to the court, a time limit that could prove a turning point in its five-year workout, Bloomberg News reported. While the commonwealth ended its record bankruptcy in March, Puerto Rico’s Electric Power Authority, called Prepa, is still going through court-ordered mediation with bondholders and insurance companies to reach a new restructuring deal after Governor Pedro Pierluisi earlier this year ripped up a prior accord. Prepa is trying to reduce about $9 billion of debt at the same time that it needs to rehabilitate a fragile and antiquated grid that leaves residents in the dark even during good weather. Luma Energy, a US-Canadian consortium, has been operating the grid since June 2021 under a temporary deal that’s set to expire Nov. 30. Prepa’s been in bankruptcy since 2017 and U.S. District Court Judge Laura Taylor Swain is eager to finish the workout by June. During a Nov. 2 court hearing, Swain signaled that she may be inclined to dismiss the case. Swain warned that if Puerto Rico’s financial oversight board — which is managing Prepa’s bankruptcy — failed to submit a confirmable debt proposal by Dec. 1, “every possible way of reacting to that will be on the table.” Martin Bienenstock, a lawyer for the board, said during the Nov. 2 hearing that it will be possible for the board to file such a proposal by the deadline. Judge Shelley C. Chapman, former US Bankruptcy Judge for the Southern District of New York and lead mediator in the talks, disagreed and said she was concerned about meeting the deadline.
