Unlawful Commonwealth Revised Fiscal Plan Demonstrates Decision to Litigate Rather Than Negotiate

Assured Guaranty Corp. and Assured Guaranty Municipal Corp., two bond insurance subsidiaries of Assured Guaranty Ltd. (NYSE:AGO) (together with their parent, Assured Guaranty), filed an Adversary Complaint against the Commonwealth of Puerto Rico, the Financial Oversight and Management Board for Puerto Rico (Oversight Board), Puerto Rico governor Hon. Ricardo Rosselló Nevares and others, in which Assured Guaranty asserts the Oversight Board developed and approved a Revised Fiscal Plan that, on its face, violates the Puerto Rico Oversight, Management, and Economic Stability Act (“PROMESA”) and the United States Constitution.

“As a municipal bond insurer, Assured Guaranty has a long-term involvement in the bonds used to fund many Puerto Rico projects and shares a strong interest in the Commonwealth’s economic recovery. For months, we have been asking that the Commonwealth and Oversight Board open constructive negotiations with creditors and stakeholders, but they have instead produced an unlawful fiscal plan, without creditor input, indicating they would rather litigate than engage in meaningful negotiations to develop a realistic solution,” said Assured Guaranty President and CEO Dominic Frederico. The Revised Fiscal Plan allocates $1.5 billion for litigation and related expenses without providing for debt service.

The Revised Fiscal Plan’s violations include:

• failure to respect the relative lawful priorities and lawful liens established by the constitution, laws, and agreements of the Commonwealth, as required by PROMESA §201(b)(1)(N);
• failure to ensure that assets, funds, or resources of an agency are not transferred to or otherwise used for the benefit of other agencies, instrumentalities, or the Commonwealth, as required by PROMESA § 201(b)(1)(M);
• failure to identify expenses for essential public services, as required by PROMESA § 201(b)(1)(B);
• failure to comply with Sections 303 and 928 of PROMESA; and
• failure to comply with the Contracts, Takings and Due Process Clauses of the United States Constitution.

Because of these clear violations, Assured Guaranty is seeking a judgment declaring that the Revised Fiscal Plan is unlawful and unconstitutional, and that the Oversight Board cannot use it as the basis for proposing a plan of adjustment in the pending Title III case for the Commonwealth. Review of the Revised Fiscal Plan at this juncture is necessary to prevent the ongoing violations of PROMESA and the United States Constitution. To the extent necessary, the Court should grant complementary injunctive relief.