NEW YORK (Reuters) — Bermudian-based bond insurer Assured Guaranty, which has more than $5 billion at stake in Puerto Rico’s debt crisis, has sued the US territory and its financial oversight board, objecting to a fiscal turnaround plan approved by the board in March.

MBIA, a US bond insurer also filed a similar suit on the day after Puerto Rico announced a historic restructuring of its public debt, touching off what may be the biggest bankruptcy ever in the $3.8 trillion US municipal bond market.

It followed similar actions by another US bond insurer, Ambac Financial Group, and other major creditors earlier in the week.

At immediate issue in the lawsuit is the legality of the turnaround plan adopted by the oversight board installed under last year’s US congressional rescue law, known as Promesa.

The plan forecasts the island having only $800 million a year to service debt, auguring major haircuts for bondholders. It requires “illegal (fund) transfers by allowing the Commonwealth to simply misappropriate for its own general use special revenues that constitute property of its public corporations and their bondholders”, said the complaint filed in federal court in Puerto Rico.

Assured could be on the hook for as much as $5.4 billion in bondholder losses on defaulted debt, while MBIA’s National Public Finance Guarantee Corp has about $3.6 billion of exposure.

On Wednesday, Puerto Rico’s oversight board filed a petition to protect the commonwealth from its creditors in US District Court in Puerto Rico. The filing was made under Title III of Promesa, which allows for a court debt-restructuring process akin to US bankruptcy protection.

Puerto Rico is barred from a traditional municipal bankruptcy under Chapter 9 of the US code.

It was not immediately clear just how much of Puerto Rico’s roughly $70 billion of debt is included in the bankruptcy filing.

• Assured Guaranty reported first-quarter profit of $317 million.

The company said last Thursday night it had profit of $2.49 per share. Earnings, adjusted for non-recurring gains, were $2.14 per share.

Assured posted revenue of $527 million in the period. Its adjusted revenue was $375 million.

Assured Guaranty shares have fallen slightly since the beginning of the year. The stock has climbed 47 per cent in the last 12 months.