Puerto Rico Electric Power Authority

The bond parties want the U.S. Court of Appeals for the First Circuit in Boston to overturn the U.S. District Court's rulings on their efforts to gain control of PREPA.

Bond parties said U.S. District Court Judge Laura Taylor Swain's arguments against a claim were wrong on several bases.

The local government is seeking to replace LUMA Energy as the island's transmission and distribution company.

The Energy Bureau said rate adjustments that would help pay off debt should be considered after a PREPA plan of adjustment is approved.

U.S. District Judge Laura Taylor Swain ordered the parties in the PREPA bankruptcy to focus on the bondholders' accounting counterclaim.

U.S. District Judge Laura Taylor Swain suggested the board should include a contingent vehicle instrument in the proposed plan of adjustment.

Without that claim, bondholders are fighting for repayment of about $8.5 billion.

The board wants the court to reject a wide range of bondholder discovery requests related to their administrative expense claim.

Puerto Rico Gov. Jenniffer González Colón filed suit to end the island's contract with LUMA Energy for electrical transmission and distribution.

92% of the holders or insurers of Puerto Rico Electric Power Authority bonds reportedly now oppose the Oversight Board's proposed restructuring deal.

The three Puerto Rico Oversight Board members can resume their positions immidiately, District Court Judge Maria Antongiorgi-Jordan ruled.

"A lawsuit like this is probably critical for any future settlements or agreements, because it will (maybe) determine up front if the incoming [board] members, and thus whatever agreements they sign, are valid or not," said Matt Fabian, a partner at Municipal Market Analytics.

The Puerto Rico Energy Bureau has about 150 days to set new rates for consumers.

PREPA bondholders who back the Oversight Board's proposed deal say it will lose their support if not confirmed by Oct. 1.

U.S. District Judge Laura Taylor Swain gave no indication at the hearing as to how she was leaning and said some issues might not be able to be resolved as a matter of law.

Two New York members of Congress called them "vulture funds" trying to get "blood out of a turnip" at the expense of Puerto Rico electricity customers.

Puerto Rico's disputes with New Fortress Energy, the parent of the island's power plant operator, Genera PR, could spread to PREPA.

As long as the Oversight Board offers virtually nothing to many PREPA bondholders, the bankruptcy is likely to be tied up for years in litigation.

Whether PREPA can pay the administrative expense claim doesn't affect its validity, the bond parties said.

Observers say a bankruptcy by Genera PR could complicate the PREPA bankruptcy.