Hedge funds sue Puerto Rico, accuse govt of diverting funds

Hedge funds representing a group of Puerto Rico bondholders have sued the U.S. territory, saying it violated the terms of a rescue package recently approved by Congress.

The federal lawsuit filed Wednesday claims the Puerto Rico government recently approved measures to divert hundreds of millions of dollars amid a dire economic crisis. The hedge funds contend Puerto Rico is barred from taking certain actions before the creation of a federal control board that will oversee the island government's finances.

It is the latest in a series of lawsuits filed against Puerto Rico as the territory seeks to restructure $68 billion in public debt that the governor has said is unpayable.

Puerto Rico Chief of Staff Grace Santana said creditors who sue the government will not receive special treatment.