Creditors sue to block Puerto Rico development bank withdrawalsSAN JUAN (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, which 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. The lawsuit is the latest sign of an increasingly urgent financial crisis in Puerto Rico, which has $70 billion in total debt, a 45 percent poverty rate and a shrinking population.  Puerto Rico’s governor, Alejandro Garcia Padilla, has said the GDB is near insolvency, and is considering a moratorium on debt payments. The GDB has a payment due on May 1 of approximately $422 million. The island, as a whole, faces a July 1 payment of $1.55 billion on various debt classes. The GDB and its creditors are in the midst of restructuring talks that could lead to a forbearance agreement or debt restructuring. Monday’s lawsuit was filed to give those talks time to evolve without a fear of a run on the bank, said Donald Bernstein, a lawyer for the creditors. “GDB needs to be able to fund essential services, but to the extent money is being pulled out by people who want to bail out of the situation at the expense of other creditors, that shouldn’t happen,” Bernstein said in an interview. GDB acts as the commonwealth’s main liquidity source, with public agencies drawing on accounts to fund services and pay their own debt. GDP President Melba Acosta Febo said the central claim of the lawsuit, that the bank withheld financial information in order to prefer certain depositors over its bondholders, is false and not based in fact. “Although the specific allegations set forth in the lawsuit are erroneous, it is clear that our creditors agree with us on one thing: Puerto Rico’s fiscal situation is dismal, the Island’s debt is unpayable, and the need for a federal restructuring regime to help the Commonwealth on the road to recovery is acute,” Acosta said in a statement. A default at the GDB could allow creditors to seek the appointment of a receiver, a process that would be triggered by Puerto Rico’s treasury secretary, Juan Zaragoza.  Zaragoza last week resigned his membership on GDB’s board of directors, which a source close to the restructuring talks at GDB told Reuters was done to avoid a conflict of interest in the event he must appoint a receiver. The same source said the island’s treasury department is not considering removing money from GDB, but is considering opening new accounts at other banks in the event GDB becomes insolvent. politicsNews
creditors sue block puerto rico development bank withdrawalssan juan reuters creditors puerto rico government development bank monday sued stop distributing money creditors call preferential transfers ahead db may debt payment puerto rico governor says may payable hedge funds including brigade capital management clare road asset management hold db billion debt asked federal court san juan puerto rico bar municipalities public entities depository removing money prevent run bank the lawsuit latest sign increasingly urgent financial crisis puerto rico billion total debt percent poverty rate shrinking population puerto rico governor alejandro garcia vanilla said db near insolvency considering moratorium debt payments the db payment due may approximately million the island whole faces july payment billion various debt classes the db creditors midst restructuring talks could lead forbearance agreement debt restructuring monday lawsuit filed give talks time evolve without fear run bank said donald einstein lawyer creditors db needs able fund essential services extent money pulled people want bail situation expense creditors happen einstein said interview db acts commonwealth main liquidity source public agencies drawing accounts fund services pay debt gdp president media costa feb said central claim lawsuit bank withheld financial information order prefer certain depository bondholders false based fact although specific allegations set forth lawsuit erroneous clear creditors agree us one thing puerto rico fiscal situation dismal island debt payable need federal restructuring regime help commonwealth road recovery acute costa said statement a default db could allow creditors seek appointment receiver process would triggered puerto rico treasury secretary juan zaragoza zaragoza last week resigned membership db board directors source close restructuring talks db told reuters done avoid conflict interest event must appoint receiver the source said island treasury department considering removing money db considering opening new accounts banks event db becomes insolvent politicsnews
Your task is to classify the provided input as real or fake news. Label 0 is meant for fake news, Label 1 is for real news. TEXT: Creditors sue to block Puerto Rico development bank withdrawalsSAN JUAN (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, which 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. The lawsuit is the latest sign of an increasingly urgent financial crisis in Puerto Rico, which has $70 billion in total debt, a 45 percent poverty rate and a shrinking population.  Puerto Rico’s governor, Alejandro Garcia Padilla, has said the GDB is near insolvency, and is considering a moratorium on debt payments. The GDB has a payment due on May 1 of approximately $422 million. The island, as a whole, faces a July 1 payment of $1.55 billion on various debt classes. The GDB and its creditors are in the midst of restructuring talks that could lead to a forbearance agreement or debt restructuring. Monday’s lawsuit was filed to give those talks time to evolve without a fear of a run on the bank, said Donald Bernstein, a lawyer for the creditors. “GDB needs to be able to fund essential services, but to the extent money is being pulled out by people who want to bail out of the situation at the expense of other creditors, that shouldn’t happen,” Bernstein said in an interview. GDB acts as the commonwealth’s main liquidity source, with public agencies drawing on accounts to fund services and pay their own debt. GDP President Melba Acosta Febo said the central claim of the lawsuit, that the bank withheld financial information in order to prefer certain depositors over its bondholders, is false and not based in fact. “Although the specific allegations set forth in the lawsuit are erroneous, it is clear that our creditors agree with us on one thing: Puerto Rico’s fiscal situation is dismal, the Island’s debt is unpayable, and the need for a federal restructuring regime to help the Commonwealth on the road to recovery is acute,” Acosta said in a statement. A default at the GDB could allow creditors to seek the appointment of a receiver, a process that would be triggered by Puerto Rico’s treasury secretary, Juan Zaragoza.  Zaragoza last week resigned his membership on GDB’s board of directors, which a source close to the restructuring talks at GDB told Reuters was done to avoid a conflict of interest in the event he must appoint a receiver. The same source said the island’s treasury department is not considering removing money from GDB, but is considering opening new accounts at other banks in the event GDB becomes insolvent. politicsNews
Your task is to classify the provided input as real or fake news. Label 0 is meant for fake news, Label 1 is for real news. TEXT: creditors sue block puerto rico development bank withdrawalssan juan reuters creditors puerto rico government development bank monday sued stop distributing money creditors call preferential transfers ahead db may debt payment puerto rico governor says may payable hedge funds including brigade capital management clare road asset management hold db billion debt asked federal court san juan puerto rico bar municipalities public entities depository removing money prevent run bank the lawsuit latest sign increasingly urgent financial crisis puerto rico billion total debt percent poverty rate shrinking population puerto rico governor alejandro garcia vanilla said db near insolvency considering moratorium debt payments the db payment due may approximately million the island whole faces july payment billion various debt classes the db creditors midst restructuring talks could lead forbearance agreement debt restructuring monday lawsuit filed give talks time evolve without fear run bank said donald einstein lawyer creditors db needs able fund essential services extent money pulled people want bail situation expense creditors happen einstein said interview db acts commonwealth main liquidity source public agencies drawing accounts fund services pay debt gdp president media costa feb said central claim lawsuit bank withheld financial information order prefer certain depository bondholders false based fact although specific allegations set forth lawsuit erroneous clear creditors agree us one thing puerto rico fiscal situation dismal island debt payable need federal restructuring regime help commonwealth road recovery acute costa said statement a default db could allow creditors seek appointment receiver process would triggered puerto rico treasury secretary juan zaragoza zaragoza last week resigned membership db board directors source close restructuring talks db told reuters done avoid conflict interest event must appoint receiver the source said island treasury department considering removing money db considering opening new accounts banks event db becomes insolvent politicsnews