Puerto Rico's financial oversight board said that litigation brought by creditors against the U.S. territory should remain on pause while the island works to resolve $70 billion of public debt its government has said that it cannot pay, Reuters reported on Friday. In a brief, the seven-member board said the Puerto Rican rescue law known as PROMESA requires the lawsuits to stay frozen. This would allow the board to fulfill its mandate of overseeing the island's fiscal turnaround plan and facilitating debt restructuring talks with creditors, it said. PROMESA, signed by President Barack Obama on June 30 after earning bipartisan support in Congress, called for creditor lawsuits against Puerto Rico to be put on hold, or "stayed," while the federally appointed oversight board gets up to speed on the fiscal situation. But creditors have filed at least a dozen lawsuits both before and since the law's passage, and in several cases have claimed the stay does not apply to them. The lawsuits generally allege that Puerto Rico violated the U.S. Constitution by imposing a debt moratorium this year, allowing it to forgo certain payments and redirect revenues that had been earmarked for debt to cover other expenses instead. The creditors claim to be exempt from the stay because they are not seeking an actual payment of debt, just a declaration that the moratorium was unlawful. Read more.
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