On Monday, August 7, 2017, the Aurelius Capital Management hedge fund, as a $468 million holder of Puerto Rico’s general obligation bonds, filed a lawsuit in the United States District Court in San Juan arguing that the federal Oversight Board, created by the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), was unconstitutionally established.
Claims of Dismissal Lawsuit
The lawsuit cited the “Appointments Clause” of the United States Constitution, which calls for all principal officers of the federal government to be appointed by the President and confirmed by the U.S. Senate. The lawsuit claims this did not happen when the seven members of the Oversight Board were selected. Instead, the members were “handpicked by individual members of Congress” through “an intricate system of Balkanized lists, designed to severely constrain the President’s appointment powers.” Continue Reading