GO Bondholders charge Puerto Rico with Violations of PROMESA

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WASHINGTON, July 20, 2016 /PRNewswire/ -- Today, certain holders of Puerto Rico's general obligation (GO) bonds filed suit in the U.S. District Court for the District of Puerto Rico seeking to stop Puerto Rico's violations of the Puerto Rico Oversight, Management and Economic Stability Act ("PROMESA").  The lawsuit is brought by entities managed by Aurelius Capital Management, LP, Autonomy Capital (Jersey) L.P., Covalent Partners LLC, FCO Advisors LP, Monarch Alternative Capital LP and Stone Lion Capital Partners L.P.   

Andrew Rosenberg of Paul, Weiss, Rifkind, Wharton & Garrison LLP, legal advisor to the general obligation bondholders, commented:

"The government of Puerto Rico has been violating PROMESA from practically the moment of its enactment.  Section 204(c)(3) of PROMESA requires that Puerto Rico 'shall not enact new laws that either permit the transfer of any funds or assets outside the ordinary course of business or that are inconsistent with the constitution or laws of the territory as of the date of enactment of this Act.'  Just hours after PROMESA took effect, Puerto Rico brazenly violated this provision by enacting extraordinary measures diverting many hundreds of millions of dollars.

"Section 204(c)(3) is designed to preserve the status quo until the Oversight Board is formed.  Puerto Rico's officials have upended the status quo.  Our clients have sued to restore it." 

To view a copy of the complaint, visit: here.   

SOURCE General Obligation Bondholders of Puerto Rico