Ranking Member Grijalva Applauds Court Ruling to Limit Funds Entitled to Bondholders in PREPA Bankruptcy Case

Washington, D.C. – House Natural Resources Committee Ranking Member Raúl M. Grijalva (D-Ariz.) today issued the following statement on U.S. District Judge Laura Taylor Swain’s Wednesday ruling that holders of Puerto Rico Electric Power Authority (PREPA) bonds do not have a secure claim to the utility’s current and future revenue and are only entitled to the value of funds in existing PREPA reserve accounts. The U.S. District Court also ruled that bondholders had an unsecured claim to the utility's net income. 

Judge Swain instructed all parties to immediately continue mediation and expedite the resolution of any outstanding disputes. This decision has the potential to impact the mediation process, resulting in a significant reduction of the $9 billion owed by the utility.

“I applaud Judge Laura Taylor Swain’s recent decision with respect to the Puerto Rico Electric Power Authority’s debt restructuring,” said Ranking Member Grijalva. “This decision has the potential to reduce the debt burden on PREPA’s customers, help spur the utility’s modernization, and advance Puerto Rico’s economic development. Economists and financial experts have been clear about the importance of sufficiently discharging the territory’s public debt to avoid another default. I will continue conducting oversight of PROMESA’s implementation to ensure the debt restructuring goals of the people of Puerto Rico are met.”

Judge Swain’s decision is consistent with the Government of Puerto Rico’s position that bondholders’ claims did not extend to PREPA’s current and future income, but were instead limited to funds in specific PREPA accounts.

Puerto Rico’s central government successfully restructured its multi-billion-dollar public debts in March 2022, resolving the largest municipal bankruptcy in U.S. history. However, PREPA’s $9 billion debt remains the largest and final piece of the restructuring process, as well as an outstanding obstacle to modernizing Puerto Rico’s energy infrastructure.

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