UPDATE 3-Bond insurers sue Puerto Rico over debt default, clawbacks
* Bond insurers: Puerto Rico's clawbacks violated U.S. constitution
* Lawsuit is first from creditors over Puerto Rico defaults (Adds statement from Puerto Rico Governor)
By Nick Brown
SAN JUAN, Jan 8 (Reuters) - Insurers of Puerto Rican bonds sued the U.S. commonwealth late on Thursday over its recent debt default, the first lawsuit against the island since its governor called its $70 billion debt load "unpayable" last June.
The lawsuit by Assured Guaranty and Ambac Financial , filed in U.S. federal court in Puerto Rico, asks a judge to declare that Puerto Rico violated the U.S. constitution when it diverted $163 million from revenue streams meant to pay debt at the island's infrastructure, highway and other agencies.
It also looks to block Puerto Rico from executing these so-called clawbacks.
The lawsuit is an opening salvo in what could be a long and expensive court fight over Puerto Rico's efforts to restructure its debt. The island lacks access to U.S. bankruptcy protections, and creditors have resisted voluntary concessions, making for a messy and unpredictable path to restructuring.
In a statement, Governor Alejandro Garcia Padilla said this will "force a race to the courthouse, adding that "with no legal framework to handle this impending litigation crisis both the Commonwealth and its creditors will soon face the opposite of due process and rule of law."
In June, Garcia Padilla called the island's debt load "unpayable" and sought concessions from bondholders. Continuación...