The Financial Oversight and Management Board for Puerto Rico filed Sunday claims against holders of Employees Retirement System (ERS) bonds to recover some $392 million in aggregate payments, but said that it would pursue those claims only if the bonds were declared illegal, Caribbean Business reported. The actions intend to recover interest and principal from bondholders who own at least $2.5 million worth of bonds that the board said the ERS was “never authorized” to issue to the public in 2008 because the issuance was not submitted to the island’s legislature. The panel said in a statement it does not intend to pursue litigation until the court determines the bonds are invalid. “The people of Puerto Rico should not have to pay for bonds that were issued illegally,” said David Skeel, a member of the board’s Special Claims Committee. “Nevertheless, no holders of smaller amounts of bonds will have to pay back any principal or interest.” The board also filed complaints against vendors to recover payments by ERS and the Highway & Transportation Authority (HTA) that were “in conflict with the United States Bankruptcy Code and Puerto Rico law,” according the board’s announcing release.
