Thursday, October 19, 2017

Assured Guaranty withdraws lawsuit against Puerto Rico fiscal plan

By on October 7, 2017

SAN JUAN – Assured Guaranty Municipal Corp. and Assured Guaranty Corp., two bond insurance subsidiaries of Assured Guaranty Ltd., together with its subsidiaries, Assured Guaranty, have withdrawn their lawsuit challenging the legality of the Puerto Rico’s fiscal plan, according to a release issued late Friday.

In its May 3 lawsuit, Assured argues the island’s certified fiscal plan violates “multiple provisions” of the federal Promesa law as well as the U.S. Constitution.

“While we continue to believe the current Fiscal Plan is illegal, we have determined to voluntarily dismiss our complaint without prejudice at this time due to the crisis in Puerto Rico following Hurricane Maria, and the high likelihood that the Fiscal Plan will have to be revised,” said Dominic Frederico, president and CEO of Assured Guaranty.

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“Now is no time to be arguing over these issues, when residents of the island are suffering. The current focus should remain on restoration and relief for Puerto Rico. Additionally, it would be an avoidable misallocation of time, money and judicial resources to litigate issues about a Fiscal Plan that is expected to change.”

The move also comes after President Donald Trump suggested the island’s debt should be wiped out. The Puerto Rico government has said it expects to run out of money by the end of October.

Assured Guaranty urged the oversight board to “use this opportunity to reset its relationship with creditors, correct the defects in the current Fiscal Plan and work collaboratively with creditors on a new fiscal plan that complies with the mandatory statutory requirements of Promesa, the Commonwealth Constitution, and the United States Constitution.”

Meeting Promesa’s dual-stated purpose of fiscal responsibility and restoration of the commonwealth’s access to the capital markets has become even more critical in the aftermath of María.

Under applicable law, the insurer is permitted to refile the lawsuit, and said it would do so if “insufficient progress” is made in developing a new fiscal plan that “complies with Promesa and respects Assured Guaranty’s constitutional, statutory and contractual rights.”

 

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