Bonds

Puerto Rico Electric Power Authority bondholders asked a magistrate to intervene on discovery issues but were rebuffed.

Magistrate Judith Dein, who is handling discovery matters, denied the request because the Oversight Board said it was still considering bondholders’ discovery requests.

She ordered the sides to continue to negotiate, with the bondholders filing a status report on the dispute by March 27, and the board responding on March 31.

She said, if necessary, she would schedule a conference the week of April 3.

While the the board and the bondholders have been wrangling with discovery issues for more than two months, the struggle has become more urgent since the approval of the disclosure statement at the end of February. On Tuesday, the sides jointly filed an informative motion about the dispute.

The first significant court-imposed discovery deadline is April 14, but it is unclear what that deadline is for. The Ad Hoc Group of PREPA Bondholders, bond insurers Assured Guaranty, Syncora Guarantee, and bond trustee U.S. Bank N.A. are representing the bondholders’ interest in the case.

“Some objections are valid, others, not so much,” said Puerto Rico Attorney John Mudd.

The sides are arguing about the deposition of board members, the board’s release of documents, and the handling of witnesses.

The bondholders originally sought deposition of all the board members and board financial advisor David Brownstein. The board said deposition of Chairman David Skeel and Executive Director Robert Mujica should be enough.

Bondholders responded by reducing their request to four board members, with the possibility of more interviews later. The board stands by its original offer but is open to considering more interviews.

On the issue of document presentation, the board and Puerto Rico’s Fiscal Agency and Financial Advisory Authority said on Friday since discussion continue on what documents should be presented, it is “premature” for the bondholders to seek court review.

The bondholders contend the board and FAFAA’s position “is designed to delay critically necessary judicial inquiry into their exceedingly limited document productions.” The bondholders say the government parties have “severely limited what they consider to be the scope of discoverable, relevant information.”

The sides are arguing not only about the relevance of documents but about the board’s obligation to “conduct a search for discoverable information.”

Regarding expert testimony, the government parties said the experts will not be the kind that would be required to file written reports, while bondholders believe the written reports are required. Bondholders want disclosures about the expert witnesses made on April 14.

Articles You May Like

Municipals see gains as spreads tighten
Fed officials signal just one rate cut before end of 2024
Appeals court gives bondholders victory on PREPA liens
Roaring Kitty’s GameStop stake grows to 9 million shares after selling his big options position
Munis firmer ahead of $7.2B new-issue calendar