Puerto Rico hit with lawsuit as key debt negotiations stall
A group of bondholders are suing Puerto Rico's government as debt negotiations fall apart less than two weeks ahead of what would be the largest default in the island's history.
The suit filed Tuesday by holders of general obligation bonds seeks to invalidate a debt moratorium law passed in early April as the island struggles to restructure US$70 billion in public debt.
Puerto Rico is expected to default on a payment of nearly US$2 billion July 1. That amount includes more than US$700 million in general obligation bonds that are supposed to be guaranteed under the island's constitution.
Officials announced Tuesday that they are ending private talks with bondholders following several failed proposals and counter proposals involving debt payments.