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Hedge Funds Sue Puerto Rico in N.Y. Over Fiscal Crisis Law

  • Lawsuit claims legislation can’t be applied to 2014 bonds
  • Suit is over $3.5 billion in general-obligation bonds
Updated on

Puerto Rico was sued in New York by a group of hedge funds claiming it’s illegally using an emergency fiscal-crisis law to dodge payments on $3.5 billion in bonds that are supposed to be guaranteed by the island’s constitution.

The Emergency Moratorium and Financial Rehabilitation Act, signed into law in April just 48 hours after being presented to Puerto Rico’s legislature, can’t be applied to the general-obligation bonds at the center of the case, the group said in a complaint filed Tuesday in Manhattan federal court.