Puerto Rico gov’t to make $13.8 million payment June 1 to ERS bondholders
SAN JUAN – The Puerto Rican government on Tuesday said it will make a $13.8 million payment June 1 to bondholders of the Employees Retirement System (ERS).
The agreement was reportedly announced at a hearing in federal court in New York involving another case. The deal settled a lawsuit filed May 26 as part of ERS’ ongoing bankruptcy.
Earlier this week the Bank of New York Mellon (BNYM) said a dispute arose between the ERS and its bondholders regarding the bank’s ability to issue payment of the funds and exposing the bank to legal claims. The bank filed a complaint seeking a ruling on what it should do with the funds.
The ERS has to transfer to BNYM by the 20th day of each month an amount sufficient to make the interest payment due the first day of the succeeding month. The retirement system transferred $13.8 million to make the June interest payment on May 22. Later that day, the ERS demanded that BNYM return the June 1 payment to ERS.
The Puerto Rico Fiscal Agency and Financial Advisory Authority (FAFAA) stated that the June 1 payment was transferred to BNYM in violation of the automatic stay under Title III of the federal Promesa law but bondholders said the June 1 payment should be paid.