The Objection to the ERS Bonds

On March 12, 2019, the Oversight Board and the Committee filed their omnibus objection to claims filed or asserted by holders of bonds issued by the Employees Retirement System of the Government of Puerto Rico (ERS).  The ERS bonds were issued in 2008, and, as of February 2017, the aggregate outstanding principal amount of the ERS Bonds (including accretion on capital appreciation bonds) was approximately $3,156,000,000.

As explained in more detail in the omnibus objection, the Committee believes that the ERS bonds are null and void because they were issued ultra vires through a public offering for which ERS lacked valid legal authority.  This is because the statute that authorized ERS to incur debt only permitted it to seek a loan from a Puerto Rico or federal government financial institution or through a private placement—the statute did not provide ERS with the required express authorization to issue debt by means of a public offering.  Click here to see list of the ERS bonds subject to the objection.

ERS Objection Procedures

On October 7, 2019, the court entered an order approving certain initial procedure with respect to the litigation of objections to ERS bond claims.  To learn more about this litigation, click here.