Fiscal board seeks second rehearing from appeals court

The Financial Oversight and Management Board recently asked for a panel rehearing of the U.S. First Circuit Court of Appeals decision on Nov. 13 that found that bondholders had perfected their security interest in future net revenues of the Puerto Rico Electric Power Authority (PREPA).

The Unsecured Creditors Committee and the Puerto Rico Fiscal Agency and Financial Advisory Authority (AAFAF by its initials in Spanish) also filed requests for rehearing. The parties are seeking to overturn an appeals court decision that net revenues were general intangibles, which require only filing a public notice to perfect, rather than currency and bank accounts, which require the revenue to exist before the security interest can be perfected.

“There is no evidence in the record that net revenues ever take any form except money or deposit accounts,” the oversight board argued in its Nov. 27 request. “As such, there are no ‘moneys’ that are not ‘currency’ or in ‘deposit accounts’ and no basis, in law or in the record, for the panel’s ruling that the net revenues constitute ‘general intangibles’.”