(Bloomberg) Hedge funds holding debt in Puerto Rico’s Government Development Bank sued to stop the island’s key fiscal entity from making payments to local government agencies as it faces a growing cash shortage and the prospect of insolvency.
The funds, which include affiliates of Brigade Capital Management, Claren Road Asset Management and Solus Alternative Asset Management, accused the bank in a lawsuit filed Monday in San Juan federal court of seeking to “prop up” local agencies at the expense of other creditors. The situation may imperil restructuring efforts for the bank, which its regulator says is facing a cash shortfall of as much as $1.3 billion in June.
