Bondholder expert: $3.7 billion net revenue found that PREPA says is not there

By The Star Staff

As the bankruptcy proceedings for the Puerto Rico Electric Power Authority (PREPA) continue, a new development has emerged in the form of a $3.7 billion net revenue accrual from 2017 to 2023 that the utility says did not happen.

Maureen Chakraborty, a consultant working for bondholders, said PREPA accrued $3.7 billion in net revenues from July 2017 to June 2023.

She also found that PREPA accrued but did not credit about $2.9 billion of those net revenues to the sinking fund during the same period. The method she used to make her calculations using the utility’s monthly results was redacted.

Chakraborty’s findings reveal a significant discrepancy in the figures reported by PREPA and the actual net revenues generated during the bankruptcy period. The revelation is in stark contrast to the Financial Oversight and Management Board’s claim that PREPA had not generated any net revenues during the bankruptcy proceedings. The oversight board says the monthly reports are unaudited.

While the oversight board disputes the bondholders’ argument, the latter insists that they have an administrative claim on the accumulated revenues during the bankruptcy.

“The Board is wrong,” the bondholders said. “PREPA’s use of the Bondholders’ collateral requires the allowance of an administrative expense claim under two independent provisions of the Bankruptcy Code.”

If PREPA is required to pay the $3.7 billion, the amount will be on top of the $2.6 billion in cash or bonds, excluding pension liabilities, that the debt adjustment plan proposes to pay.

Chakraborty was retained by Assured Guaranty, GoldenTree Asset Management, National Public Finance Guarantee Corp, the PREPA ad hoc group and Syncora Guarantee.

PREPA has been in bankruptcy since 2017 to restructure almost $10 billion in debt.