The renegotiation of $18 billion in Puerto Rico debt is creating fresh headaches for a New York bank caught up in conflicts of interest between disaffected creditors, WSJ Pro Bankruptcy reported. Bank of New York Mellon Corp., the bond trustee for Puerto Rico’s sales-tax debt, expects to spend up to $40 million defending itself against creditors who say it failed to carry out its duties to protect them, according to court records filed on Wednesday. Creditors holding these sales-tax bonds, known as Cofinas, sued BNY Mellon in New York last year, shortly before Puerto Rico embarked on a court-supervised bankruptcy to sort through a $120 billion pile of bond debt and pension obligations. The $18 billion in Cofina bonds are on the verge of being written down under a complex settlement that comes up for court approval on Jan. 16. Assuming U.S. District Judge Laura Taylor Swain approves the planned restructuring, creditors can resume suing BNY Mellon.
