Puerto Rico’s federal oversight board sued dozens of banks and bondholders to claw back more than $1 billion in fees and interest payments tied to debt the government claims is null and void, Reuters reported. The suits, filed just before a May 2 deadline, escalate the board’s conflict with hedge funds and other investors who hold some $6 billion of Puerto Rico general-obligation debt. The cases are part of an effort by island officials to cancel large chunks of general-obligation bonds issued in 2012 and 2014. The board, and some island creditors, argue the debt was sold after the government overshot its constitutional debt limit. The latest legal challenges pose a risk for banks including Barclays Plc, Bank of America Corp., Morgan Stanley, JPMorgan Chase & Co, Goldman Sachs Group Inc., Banco Santander SA and others that underwrote or otherwise helped engineer Puerto Rico’s debt as its financial troubles escalated. Representatives of those banks declined to comment or didn’t immediately respond.
