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U.S. Hedge Fund Files Suit To Block Puerto Rico Law Allowing Debt Restructuring

This July 16, 2014 photo shows the financial district in San Juan, Puerto Rico. Puerto Rico has seen a flurry of credit rating downgrades since the announcement of a law that allows some public corporations to restructure their debt if needed. The law was approved as the U.S. territory enters its eighth year in recession. (AP Photo/Ricardo Arduengo)

This July 16, 2014 photo shows the financial district in San Juan, Puerto Rico. Puerto Rico has seen a flurry of credit rating downgrades since the announcement of a law that allows some public corporations to restructure their debt if needed. The law was approved as the U.S. territory enters its eighth year in recession. (AP Photo/Ricardo Arduengo)  (AP)

The government of Puerto Rico is now facing a second lawsuit in response to a new law that would allow certain public corporations in the U.S. territory to restructure their debt if needed.

U.S. hedge fund BlueMountain Capital Management, LLC says in a lawsuit filed Tuesday that the law is unconstitutional.

The company holds bonds issued by Puerto Rico's power company, which many believe will be the first to restructure its debt. The Electric Power Authority holds some $9 billion in debt.

The Templeton and Oppenheimer investment funds previously filed a similar lawsuit on June 28. The government has asked to have that lawsuit dismissed.

The law was approved as Puerto Rico seeks to emerge from a nearly decade-long economic slump and struggles with $73 billion in public debt.

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