Puerto Rico hit with 2 lawsuits challenging board’s power
SAN JUAN, Puerto Rico — Puerto Rico was hit with two lawsuits Monday that for the first time challenge the constitutionality of a federal control board overseeing the island’s finances and its power to start a bankruptcy-like court process for some of the U.S. territory’s more than $70 billion public debt.
One of the lawsuits was filed by U.S. hedge fund Aurelius Capital Management, which holds more than $470 million in Puerto Rico general obligation bonds, among other debt. It is the same hedge fund that was involved in a 15-year dispute over defaulted bonds issued by Argentina.
The second lawsuit was filed by the UTIER, a Puerto Rico union that represents about a third of the 9,550 employees at the island’s Electric Power Authority.
Both argue that the board’s seven members were never approved by the U.S. Senate and thus they have no power.