April 4, 2016 / 6:32 PM / 2 years ago

Creditors sue to block Puerto Rico development bank withdrawals

SAN JUAN, April 4 (Reuters) - Creditors of Puerto Rico’s Government Development Bank on Monday sued to stop it from distributing money to creditors in what they call “preferential transfers” ahead of the GDB’s May 1 debt payment that Puerto Rico’s governor says may not be payable.

Hedge funds including Brigade Capital Management and Claren Road Asset Management, who hold some of GDB’s $3.75 billion in debt, asked a federal court in San Juan, Puerto Rico, to bar municipalities, public entities and other depositors from removing their money, to prevent a run on the bank. (Reporting By Nick Brown in San Juan and Jonathan Stempel in New York; Editing by Daniel Bases and Chizu Nomiyama)

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