Senior creditors of Puerto Rican debt backed by the island's sales tax revenues are seeking to depose government officials over what they see as conflicts of interest in how the U.S. territory manages its bond payments, Reuters reported yesterday. As Puerto Rico sorts its way through the biggest bankruptcy in U.S. municipal history with $70 billion in bond debt and another $49 billion in pension liabilities, several creditor groups are litigating feverishly over who gets paid first. This group, holding some $2.5 billion in senior debt issued by Puerto Rico's sales tax authority, COFINA, asked a judge yesterday to let them depose officials in charge of Puerto Rico's fiscal agency, known by its acronym AAFAF. Court papers filed by the senior creditor group, which includes Cyrus Capital Partners and Tilden Park Capital Management, said AAFAF "suffers from irreconcilable conflicts of interest" because it acts on behalf of both COFINA and Puerto Rico's central government — separate debt issuers whose creditors are fighting over the same money. Read more.
For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.
