Puerto Rico Sued for Diverting Cash After Federal Law Passed
- Puerto Rico’s fund diversion violates federal law, funds claim
- Aurelius, Autonomy and Monarch sue island’s Governor
This article is for subscribers only.
A group of hedge funds sued Puerto Rico Governor Alejandro Garcia Padilla, claiming the island government is using a default on its debt to shirk its responsibility to pay bondholders.
Puerto Rico defaulted on almost $1 billion of principal and interest on July 1 as Garcia Padilla said the commonwealth was unable to pay creditors and continue essential services. It happened one day after President Barack Obama enacted a law, called Promesa, creating a federal control board to oversee the restructuring of the commonwealth’s $70 billion of debt. The law also shields Puerto Rico from creditor lawsuits seeking repayment.