Federal judge orders mediation to break impasse over Puerto Rico power company debt
A federal judge overseeing a drawn-out debt-restructuring process for Puerto Rico’s power company has ordered all parties to mediation
SAN JUAN, Puerto Rico — A federal judge overseeing a drawn-out debt-restructuring process for Puerto Rico’s power company ordered all parties to mediation on Wednesday in the latest attempt to break an impasse that has sparked widespread indignation.
The U.S. territory’s Electric Power Authority holds more than $10 billion in debt and other claims — the biggest of any of the island’s state agencies — and efforts to restructure it in recent years have failed, crippling the island’s ability to attract investors and leaving residents who already pay some of the highest electric bills in a U.S. jurisdiction in limbo.
“Movement is necessary to resolve this,” said District Judge Laura Taylor Swain during the two-hour hearing held in New York. “I need response with alacrity.”
Swain also imposed a two-month stay on litigation as she urged all sides to work in good faith starting immediately to reach a compromise.
“Please keep Puerto Rico’s people in mind as you go into this,” she said.
Swain’s decision comes nearly a month after a First Circuit appeals court in Boston restored $9 billion worth in claims made by bondholders following the power company’s bankruptcy. But a federal control board that oversees Puerto Rico’s finances noted that the power company has no net income with which to pay bondholders.
As a result of the June ruling, Swain is tasked with determining how much bondholders would be able to collect. But first, the board and bondholders will go into mediation, with many doubtful of any result.
Shortly before Wednesday’s ruling, lead mediator Judge Shelley Chapman said it was
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