By The Star Staff
Despite the objection of more than two dozen municipalities, the judge overseeing the Puerto Rico Electric Power Authority’s (PREPA) bankruptcy case gave the green light to PREPA’s debt settlement with Cobra Acquisitions for work to restore the grid after it was destroyed by Hurricanes Irma and Maria in 2017.
Swain made her ruling during Wednesday’s omnibus hearing to discuss the state of PREPA’s bankruptcy case.
At least 15 municipalities are objecting to the settlement with Cobra Acquisitions because they will lose $75 million in construction and municipal taxes. The government has said the settlement does not stop towns from seeking the tax payments owed for the construction work performed by Cobra.
PREPA agreed on July 31 to back Cobra Acquisitions in its municipal tax dispute, as the utility reached a $188 million settlement with the company.
Cobra had initially argued that PREPA owed $406 million, including interest expenses for work completed more than five years ago after Hurricanes Maria and Irma devastated the island.
PREPA would pay Cobra $150 million 10 business days after Swain approves the settlement, and another $20 million once the electric utility’s bankruptcy plan is confirmed.
PREPA had also agreed to back Cobra in the tax dispute, but not be liable for the money if Cobra ultimately loses.
Swain said during the hearing that the municipalities violated PREPA’s automatic stay by keeping the funding that the utility was going to use to pay Cobra.
The towns that claim Cobra owes them money are: Gurabo, Las Piedras, Humacao, Caguas, Salinas, Arroyo, Cayey, Guayama, Yabucoa, Guaynabo, Patillas, Maunabo, Ceiba, Naguabo and Utuado.
Foreman Electric Services also disputed the payment to Cobra but Swain said the company did not have standing to intervene in the dispute.
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