NEW YORK, July 22, 2014 /PRNewswire-HISPANIC PR WIRE/ — BlueMountain Capital Management, LLC filed a lawsuit on Tuesday against the Government of Puerto Rico, challenging the legality of a new law that allows certain public corporations to avoid their debts.

Funds managed by BlueMountain Capital are holders of power revenue bonds in Puerto Rico Electric Power Authority (PREPA), a public corporation that provides electrical power to residents and businesses in the Commonwealth of Puerto Rico.

PREPA is widely considered the most likely public corporation to seek to avoid its debts under the Puerto Rico Public Corporation Debt Enforcement and Recovery Act, which was enacted on June 28, 2014.

Upon filing the complaint, former United States Solicitor General and lead counsel for BlueMountain Capital, Theodore B. Olson of Gibson, Dunn & Crutcher, said:

“Puerto Rico’s new debt avoidance law breaks faith with PREPA’s investors by erecting an unconstitutional bankruptcy regime to subvert their contractual rights – which is exactly what the Commonwealth promised it would never do. The problems raised by Puerto Rico’s massive debt burden are undoubtedly very serious, but tearing up contracts, disregarding federal law, and abusing power to arbitrarily pick winners and losers is not the answer. The Constitution of the United States plainly forbids that approach. We will ask the courts to enforce the Constitution, to halt the damage that the Commonwealth’s new bankruptcy law is inflicting on investors, and to require the Commonwealth to respect the rule of law and live up to its agreements.”

BlueMountain Capital issued the following statement:

“We regret that we have no other way to ensure our legal, contractual rights than to file a complaint in the court system. Rather than walking away from contracts, the Commonwealth and PREPA should collaborate with its investors to develop real solutions that put PREPA, the Commonwealth and its institutions on a path to financial stability. These solutions exist. We look forward to working constructively to arrive at a resolution.”

The lawsuit was filed in the U.S. District Court of Puerto Rico. To receive a copy of the complaint, contact Miriam Warren at [email protected].

About BlueMountain Capital Management, LLC
BlueMountain Capital Management, LLC (“BlueMountain Capital”) is an absolute return manager with over $20 billion under management.  BlueMountain Capital and its affiliates have offices in New York, London, and Tokyo. More information can be found at www.bluemountaincapital.com.