Assured CEO Replies To Puerto Rico Governor
In response to Puerto Rico Governor Garcia Padilla’s statement reported on Friday, January 8 that there is no legal framework to address Puerto Rico’s debt disputes and that “the Commonwealth and its creditors will soon face the opposite of due process and rule of law,” Dominic Frederico, President and CEO of Assured Guaranty Ltd. [together with its subsidiaries, Assured Guaranty], released a statement.
Mr Frederico said, “We’re disappointed that the Governor continues to focus his efforts on chapter 9 bankruptcy access rather than initiating solutions that promote a consensual resolution of the island’s fiscal, economic and structural problems.”
Al Jazeera’s report on Puerto Rico defaulting on part of its debt
“It is ironic that the Governor’s remarks feign concern about the absence of a legal framework, due process and the rule of law when it was his illegal action, ordering the confiscation of pledged revenues through clawbacks, that violates the constitutional rights of the holders and insurers of bonds issued by Puerto Rico’s Highways and Transportation Authority, Infrastructure Financing Agency, and Convention Center District Authority,” Mr Frederico continued.
“Unlike Governor Garcia Padilla, we believe the United States District Court for the District of Puerto Rico is an appropriate forum to resolve the clawback litigation, and we have confidence in the men and women who administer the judicial system that is the true backbone of the rule of law — a longstanding legal framework used to enforce contracts under the U.S. Constitution and a well-established body of contract law built through centuries of jurisprudence.
“Instead of doing everything within their power to legally manage their debt, reform their government and rebuild their economy, the government of Puerto Rico has instead adopted a strategy to deliberately promote a ‘crisis narrative’ intended to gain retroactive access to bankruptcy from the U.S. Congress. This strategy has worsened Puerto Rico’s situation, eroded its credibility and delayed prospects for recovery.
“We continue to urge the Governor to recognize that a retroactive application of chapter 9 to wipe away obligations to long-term investors and partners of Puerto Rico will not fix the Commonwealth’s problems and will instead incentivize a continuation of bloated spending, corruption and contempt of law with no accountability.
“The Commonwealth should instead focus on developing consensual solutions that address the island’s asserted liquidity issues and implementing necessary reforms to promote transparency and economic growth.
“Assured Guaranty stands ready to continue working on those solutions, but will take all steps necessary to ensure that existing law is correctly applied to the debt it insures. We believe this will help protect the public’s confidence in the municipal bond market, which is threatened by Puerto Rico’s reversal of its willingness to acknowledge its obligations.”
ssured Guaranty Ltd. is a publicly traded Bermuda-based holding company.
