A federal judge curbed Puerto Rico bondholders’ rights to the electric revenue generated by its public power utility, the last major public corporation in the U.S. territory still in bankruptcy after its other public debts were restructured, WSJ Pro Bankruptcy reported. Judge Laura Taylor Swain ruled on Wednesday that utility bondholders’ collateral rights don’t extend to the current and future revenue of the Puerto Rico Electric Power Authority, known as Prepa. Bondholders were deemed to have a security interest only in certain funds in Prepa’s reserve accounts, which represent a fraction of their claims. Judge Swain said that bondholders have only an unsecured claim to the utility’s future net revenue, or its excess funds after operating expenses are paid. Further proceedings are needed to value that unsecured claim, which covers the future revenue that would have become payable to bondholders over the life of Prepa’s $8.3 billion in municipal debt, according to the decision.
