A federal judge has refused to absolve the U.S. government of liability for investors’ losses on Puerto Rico bonds, a potential blow to efforts to write down the U.S. territory’s $73 billion debt load, WSJ Pro Bankruptcy reported. The ruling issued on Friday by Judge Susan G. Braden of the U.S. Court of Federal Claims is an incremental victory for hedge funds fighting to get repaid on the $3 billion in Puerto Rico pension bonds. These creditors have targeted the U.S. directly, saying the federal government should make them whole for enacting a 2016 law that set them up for losses. The lawsuit strikes at the heart of the rescue law, known as PROMESA, designed to tackle the U.S. territory’s fiscal crisis.
