The Puerto Rico Electric Power Authority bond trustee said the Oversight Board's proposed plan of adjustment breaches the bonds' trust agreement.
"There is a fundamental clash between the duties of bondholders to each other in the trust agreement and the three bondholder [plan support agreements (PSAs)] in the plan," said bond trustee U.S. Bank N.A. attorney Clark Whitmore on the second day of
"The board's
The trust agreement, Whitmore said, requires any proceedings to be for the benefit of all bondholders. It bars bondholders from harming the agreement's security for others, and requires bondholders to equally share any available money.
The bondholder plan support agreements reached violate the trustee agreement in several ways, Whitmore said: they claim to
"The narrative that this is sanitized by offering all these deals to everyone is simply untrue," Whitmore said. An Oversight Board offer to bondholders in February 2023 was "completely meaningless" since the new bonds would include no ability to enforce any of the PREPA covenants. It was offering essentially a voluntary obligation from PREPA.
Attorneys representing PREPA's main union, retired workers association, and a commercial group also spoke against the proposed plan.
PREPA provides poor electric service and it cannot afford to both pay debt service and upgrade service, said Zoé Negrón-Comas, attorney for Union de Trabajadores de la Industria Eléctrica y Riego, PREPA's main union.
PREPA's retirement system is independent of PREPA, said Rafael Ortiz-Mendoza, attorney for Sistema de Retiro de los Empleados de la Autoridad de Energía Eléctrica. Only the pension board can change it, not the Oversight Board. The pension board is a creditor and not a debtor, he said. Yet the Oversight Board falsely claims the right to restructure pension benefits, Ortiz-Mendoza said.
Attorney Fernando Agrait, representing some commercial sector parties, said the board had failed to study the impact of the plan's rate increases on commercial properties. Agrait represented PV Properties, Windmar, and Instituto de Competividad y Sostenibilidad Economica de Puerto Rico.