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Puerto Rico fiscal board request for utility creditor info again denied

By on April 4, 2019

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Panel looking to argue against insurers who want a receiver for Prepa

SAN JUAN – U.S. Magistrate Judge Judith Dein denied Thursday the Puerto Rico Financial Oversight and Management Board’s request to reconsider a prior ruling denying its request to compel the production of information from certain insurers and bondholders of the Puerto Rico Electric Power Authority (Prepa) that want the utility to be put into receivership.

“As discussed herein, because no new evidence or appropriate claim of error has been identified for the Court, the Motion for Reconsideration is denied. The Court affirms its earlier ruling that the sought loss reserve information is not relevant,” Judge Dein said.

A group of bondholders and insurers are asking the judge overseeing Prepa’s bankruptcy-like proceedings to appoint a receiver to manage the dysfunctional public corporation. Their petition was filed in October.

The bondholders had previously requested the appointment of a receiver to raise electricity rates to pay bondholders, but the motion was rejected in 2017 by Judge Laura Taylor Swain. The renewed petition does not explicitly seek a rate hike nor demand that the creditors exert control over energy planning or budgets but to have a receiver implement sound management.

The fiscal board asked the court to compel National Public Finance Guarantee Corp., Assured Guaranty Corp., Assured Guaranty Municipal Corp., and Syncora Guarantee Inc. to “produce all documents relating directly or indirectly to Movants’ valuation and/or quantification of their security interest, if any, in PREPA’s revenues before, on, and after the Petition Date, including but not limited to all documents containing any loss reserve information concerning the PREPA bonds that has been furnished to insurance regulators.”

The insurers agreed that documents related to their valuation of their security interest would be produced but said the loss reserve information sought by the board was irrelevant. Judge Dein agreed.

The board later filed a motion for reconsideration in part based on financial information published by insurers, which it argued was new information relevant to the motion to compel. On March 25, the Unsecured Creditors Committee filed a motion supporting the board’s efforts. The reconsideration was denied by Judge Dein.

Judge denies Puerto Rico fiscal board request to compel certain bond insurer documents

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