In one of the most intense hearings since Puerto Rico’s government filed for bankruptcy, Federal District Judge Laura Taylor Swain on Wednesday ordered a stay of all judicial proceedings related to Title III. Electricity Authority (AEE) and ordered Financial Supervisory Board (JSF), the bondholders of the public corporation and other interested groups shall immediately enter into the negotiation process with the assistance of the Mediation Committee.
The resolution came about an hour and a half after Swain heard comments from attorneys about how to move forward with PREPA’s bankruptcy process. This follows the June 12 decision of a First Circuit appeal that largely favored the public corporation’s bondholders.
After all, the 60-day moratorium and the express admonition to the parties to sit down at the negotiating table was the culmination of a conference session in which, for the first time in seven years, the judge slammed the board and bondholders against PREPA, which objected, using the terms “myopic” and “delusional” to describe their positions. They insist the deal is “a failure and an act of indignity and lack of compassion” on the people of Puerto Rico. The judge described it as “unacceptable” that the people of Puerto Rico, in particular, are being overwhelmed by the heat at the moment, paying high electricity bills in exchange for already unreliable service.
“Failure is not an option,” said Swain, referring to the May 17, 2017, opening sentence of Puerto Rico’s Title III cases.
“That presumption still holds true,” the judge continued, adding that it was a failure, a “lack of imagination and courage” that failed to recognize the economic realities facing Puerto Rico and, therefore, could not resolve the issue. Financial situation of PREPA.
Swain presided over a conference session on the future of PREPA’s bankruptcy from courtroom 17C in the Southern District of New York in federal court. The hearing was televised and involved at least 200 people, with an unspecified number of attorneys and others able to meet in person at the New York courthouse or at the federal courthouse in Hawthorne.
Swain’s voice — sometimes soft and other times firm — was heard on the phone around 2:19 p.m.
The judge’s exasperation or the seriousness of the situation in the PREPA bankruptcy case resulting from the Boston decision was evident when, after his usual greeting, Swain began his speech without even allowing the clerk of the court in Puerto Rico. Carmen Tacoronte will call the case.
In his speech, Swain openly cast doubt on the board’s ability to present an adjustment plan for PREPA that would help reach a definitive understanding. And the public corporation’s analysis will prevail without new judicial attacks, which would only prolong an already seven-year process.
“And the opposing bondholders, for their part, have been equally aggressive in their attacks and seem to be trying to advance some of those fronts,” Swain said, adding that the moratorium will be extended until next September.
Stay tuned to elnuevodia.com for more details.
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