More than a dozen U.S. state attorneys general are backing an appeal by creditors of the Puerto Rico Electric Power Authority seeking to challenge a bankruptcy ruling that sharply limits their revenue claims, Bloomberg News reported. U.S. District Court Judge Laura Taylor Swain decided in March the utility’s bondholders only had a secured lien on about $16 million already deposited in reserve accounts. She then capped at $2.38 billion their right to the utility’s net revenue. Prepa, as the agency is known, owes $9 billion to bondholders and fuel-line lenders. Its creditors, including GoldenTree Asset Management and Syncora Guarantee, earlier this month appealed Swain’s ruling. Led by Jason Miyares, Virginia’s top prosecutor, the 14 attorneys general, all Republicans, are supporting that legal pushback in a brief filed to the court late Monday. Tollroads, utilities, hospitals and transit agencies throughout the U.S. sell debt to finance infrastructure development with the promise to repay from future revenue collections. Limiting investors’ ability to recoup future receipts can negatively impact the municipal-bond market, according to the filing from the attorney generals. “Doing so would harm the market and its participants — including the states, municipalities and investors — and threaten the continued viability of the primary revenue stream for vast swaths of municipal public works projects, such as water systems, health care facilities, power plants, waste disposal facilities, or low and moderate income housing programs,” according to the brief.
