Assured Guaranty subsidiaries file Puerto Rico legal challenge

A pair of bond insurance subsidiaries of Bermuda-based Assured Guaranty have filed an adversary complaint that claims that appointments to the Financial Oversight and Management Board for Puerto Rico are unconstitutional.

According to the lawsuit the appointments to the Oversight Board violated the Appointments Clause of the United States Constitution. It therefore asks the Title III Court to dismiss the Puerto Rico Highways and Transportation Authority’s Title III petition based on the Oversight Board’s lack of lawful authority to initiate such Title III proceeding.

According to Assured Guaranty, given the Title III Court’s recent dismissal of a similar lawsuit filed by another party in the Commonwealth of Puerto Rico’s Title III case, the company expects to participate in the appellate phase of the various Appointments Clause lawsuits.

Assured Guaranty said that its decision to file this lawsuit was necessitated by what it described as “the manifest constitutional defects in the Oversight Board’s appointment process and its consistent pattern of exceeding its legal authority and disregarding the creditor protections and legal requirements built into the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA).”

The lawsuit is the latest in a string of such legal actions filed by Assured Guaranty in the past few years over issues surrounding the Oversight Board and PROMESA.