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Assured Guaranty units appeal Puerto Rico court's dismissal of revenue bond case

Two of Assured Guaranty Ltd.'s bond insurance subsidiaries have appealed a Puerto Rico court's dismissal of their complaint over the commonwealth's violation of special revenue protections for Puerto Rico Highways and Transportation Authority bonds under the Bankruptcy Code.

The units filed a notice of appeal to the United States Court of Appeals for the First Circuit, according to Assured Guaranty's annual regulatory filing.

The Federal District Court in Puerto Rico on Jan. 30 dismissed the complaint filed by Assured Guaranty Corp. and Assured Guaranty Municipal Corp., saying Bankruptcy Code special revenue provisions do not mandate the turnover of pledged revenues to the payment of bonds even though they protect a lien on the revenues. The court said actions to enforce liens on pledged special revenues remain stayed.

In their June 2017 complaint, the Assured Guaranty units sought an injunction prohibiting the commonwealth from further violating the bonds' special revenue protections. They also wanted the commonwealth to remit the pledged special revenues securing the bonds as per the Bankruptcy Code's provisions.

In May 2017, Puerto Rico sought protection from creditors to restructure its $70 billion debt load.