NEW YORK--(BUSINESS WIRE)--Substantial holders (the “Plaintiffs”) of outstanding bonds of the Government Development Bank for Puerto Rico (“GDB”) announced today that they have withdrawn their request for a Temporary Restraining Order (“TRO”) in the wake of an Executive Order signed by Commonwealth Governor Alejandro J. García Padilla that largely provides the relief sought in the TRO by stopping non-essential withdrawals or transfers by GDB.
On April 5, 2016, the Holders filed a request for a TRO in the United States District Court for the District of Puerto Rico seeking to enjoin preferential transfers of assets by GDB that are prohibited under Puerto Rico law. On April 6, 2016, following the filing of Plaintiffs’ TRO Motion, the Governor of the Commonwealth of Puerto Rico, the Hon. Alejandro J. García Padilla, signed into law Act No. 21-2016, known as the Puerto Rico Emergency Moratorium and Financial Rehabilitation Act (the “Act”). On April 8, 2016, Governor García Padilla issued Executive Order 2016-010 (as in effect on the date hereof, the “Executive Order”) declaring an emergency period for GDB pursuant to the Act. The Executive Order provided substantially similar relief to that sought in the TRO request by ordering GDB to honor withdrawals or transfers only if the funds will be used for essential services and only if the depositor expects not to have an alternate source of funds with which to pay for such essential services. The Executive Order also authorizes GDB to impose weekly limitations of aggregate withdrawals.
While Plaintiffs have serious concerns about the constitutionality and legality of other provisions of the Executive Order and the Act, they 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, Vicente & Cuebas and by Ducera Partners, as financial advisor.