The U.S. District Court for Puerto Rico ended a Puerto Rico Electric Power Authority
District Court Judge Laura Taylor Swain stayed the proceeding while saying plaintiffs GoldenTree and Syncora Guarantee should raise their concerns in the adjustment hearing on March 4. Adversary proceedings are like lawsuits within bankruptcies.
In the adversary proceeding filed in November within the PREPA bankruptcy, GoldenTree and Syncora sued the Oversight Board and PREPA, alleging they illegally tried to buy creditor votes in a discriminatory plan of adjustment. They also asked that the offers be declared "bad-faith procurement" and the votes for the plan committed in this way be disqualified.
GoldenTree and Syncora complained that some bond party members of a group including BlackRock Financial Management would recover well over 40% of their asserted claims while non-consenting bondholders would only be given a 3.5% recovery.
Their filing said the existing deal violates bankruptcy law because PREPA and the board "are obligated to treat similarly situated creditors alike."
While Swain has ended this adversary proceeding, there are several other bondholders' challenges to the board's proposed plan of adjustment still alive.
In the district court there is the bankruptcy itself and an adversary in which GoldenTree and Syncora sued
In the U.S. Court of Appeals for the First Circuit, bond parties
In late December, a panel of judges for the First Circuit dismissed a PREPA bondholder suit asking it to overturn the bankruptcy's approved disclosure statement, saying legal precedent indicated they didn't have jurisdiction of disclosure statements while the bankruptcy was still pending.
