Puerto Rico hit with lawsuit as key debt negotiations stall

SAN JUAN, Puerto Rico – A group of bondholders are suing Puerto Rico’s government as debt negotiations fall apart less than two weeks ahead of what would be the largest default in the island’s history.

The suit filed Tuesday by holders of general obligation bonds seeks to invalidate a debt moratorium law passed in early April as the island struggles to restructure $70 billion in public debt.

Puerto Rico is expected to default on a payment of nearly $2 billion July 1. That amount includes more than $700 million in general obligation bonds that are supposed to be guaranteed under the island’s constitution.

Officials announced Tuesday that they are ending private talks with bondholders following several failed proposals and counterproposals involving debt payments.

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