Bondholders File Complaint in U.S. Federal District Court in Puerto Rico Seeking to Enjoin Preferential Transfers Out of the Government Development Bank for Puerto Rico

BW_CMYK_logo_press-readyNEW YORK – (BUSINESS WIRE) -Substantial holders of outstanding bonds of the Government Development Bank for Puerto Rico (GDB) announced today that they have filed a complaint in the United States District Court for the District of Puerto Rico seeking to enjoin certain transfers of assets by GDB that are prohibited under Puerto Rico law. Plaintiffs are supportive of GDB’s ongoing efforts to restructure its finances in a manner that will allow it to continue to operate and serve the Commonwealth’s agencies and municipalities, which provide essential services to the people of Puerto Rico. Plaintiffs are among the group of creditors actively engaged in restructuring discussions with GDB, as publicly announced by GDB President Melba Acosta Febo.

In light of the recent findings of the United States District Court for the District of Puerto Rico and the Office of Financial Institutions of Puerto Rico regarding GDB’s insolvency, it is imperative that GDB’s assets and liquidity be preserved and that preferential payments in violation of Puerto Rico law cease in order to permit restructuring discussions to unfold. The complaint seeks the suspension of payments by GDB, except for withdrawals needed to maintain services essential to the public safety of the citizens of Puerto Rico or to pay the ordinary course operating expenses of GDB such as utilities, rent and employee wages.

Plaintiffs hope to continue working with GDB to reach agreement on a long-term solution to its current financial difficulties.

Plaintiffs are funds managed or advised by Brigade Capital Management, LP, Claren Road Asset Management, LLC, Fore Research & Management, LP and Solus Alternative Asset Management LP. Plaintiffs are represented by Davis Polk & Wardwell LLP and Vicente & Cuebas, as counsel, and by Ducera Partners, as financial advisor.

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