Aurelius’s Puerto Rico Bankruptcy Battle Takes an Unexpected Turn

Is Puerto Rico’s general obligation debt unconstitutional? Promesa’s board argues that it is.

(John Taggart/Bloomberg)

(John Taggart/Bloomberg)

In August of 2017, Mark Brodsky’s Aurelius Capital filed a constitutional challenge to the board overseeing Puerto Rico’s bankruptcy. This week, that board returned the favor — in a fashion.

In a surprise development, the oversight board created by the Puerto Rico Oversight, Management, and Economic Stability Act — known as Promesa — filed an objection in federal bankruptcy court Monday night claiming that more than $6 billion of the bonds owned by Aurelius and other hedge funds were issued unconstitutionally and should be thrown out of...

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