At a time when creditors of crisis-hit Puerto Rico are gearing up for negotiations on restructuring the Island's debt in smaller alliances, the group of hedge funds was believed to be split off. The hedge funds group comprising over 36 firms is holding a debt of $5.2billion of ailing Puerto Rico. According to unconfirmed news, since Puerto Rico governor Alejandro Garcia Padilla said that government's debts were unsustainable, there's surfacing difference of opinion among hedge group members. In the latest development, a group of activists in the Island has started raising voice against the participation of Antonio Weiss in the restructuring plan negotiations as his connections with the Wall Street lead to a conflict of interest.

Some members of hedge funds group, according to sources on a condition of anonymity, are not willing to form nimble groups to support the restructuring package for the Puerto Rico Island. Governor Padilla in June said debts were unsustainable for the ailing Island's economy. Since then the perception among the members of hedge funds group started changing. This is likely to have a severe impact on the restructuring plan for the economy.

Earlier creditors of Puerto Rico Island teamed up to restructure and had even decided to fund the debt package with an objective of pulling the US territory bridge economy out of the crisis. Creditors were willing to bridge the gaps in the budget as well. 

Meanwhile, a group of liberal activists in the Island is raising voice against Antonio Weiss' participation in the ongoing negotiations on restructuring plan of Puerto Rico economy. Weiss is a former Lazard banker and key advisor to the US Treasury Secretary Jack Lew. Being in the official post at the US Treasury Department and having links with Wall Street make conflict of interest for Weiss, criticize the opponents' group. 

Weiss was head of Lazard, which was advising Puerto Rico on municipal debt, which has been increased to $73billion. Puerto Rico governor said this debt can't be repaid owing to the financial crisis in the Island. 

However, sources say that Puerto Rico's Government Development Bank (GDB) will have confidential talks with hedge funds on debt restructuring. The government is expecting additional funding support to the bank. In addition to this, exchanging bonds of hedge funds for new securities is also under active consideration. 

Hedge funds own Government Development Bank's bonds hired a law firm Davis Polk & Wardwell LLP and advisory firm Ducera Partners LLC to represent their interests. Avenue Capital Group, Brigade Capital Management and other firms are part of the hedge funds group. 

The hedge funds referred to as 'ad hoc group' and were in talks with Puerto Rico Island since February. The ad hoc group was negotiating with the government on the sale proposal of $2.9billion new petroleum tax bonds. 

Led by Andrew Feldstein, former JPMorgan banker, Hedge funds comprising Blue Mountain have moved courts seeking enforcement of US bankruptcy laws in Puerto Rico as well.