Puerto Rico’s Government Development Bank, which announced plans to skip the bulk of a $422 million debt payment on Sunday, said it has reached a deal with some creditors to keep negotiating a debt restructuring, potentially stemming the expected lawsuits arising from the default.

In a statement late Sunday night, GDB said it reached “indicative terms” of a deal with an ad hoc creditor group holding about $900 million of its nearly $4 billion in bonds, under which the group would agree to a two-step debt exchange, ultimately recouping about 47 percent of what they are owed.

The deal is a long way from done, and would need participation from all of GDB’s creditors in order to work, the bank said in the statement. But its effect is to avoid lawsuits from the ad hoc group, at least temporarily, in the wake of GDB’s decision Sunday to pay only the interest portion of its debt.

In a televised speech on Sunday evening, Puerto Rico Governor Alejandro Garcia Padilla imposed a moratorium on the debt payment, a “painful” decision he blamed on the absence of U.S. Congressional action to solve Puerto Rico’s debt crisis.

The U.S. territory faces $70 billion in debt, a staggering 45-percent poverty rate and a shrinking population as it enters the most dire stretch of its fiscal crisis. It owes another $1.9 billion on July 1 that Garcia Padilla has said it cannot pay.

Congress is debating a bill that would put the island’s finances under federal oversight and allow it to restructure debt in a bankruptcy-like process, but the bill has faced criticism from conservative and liberal wings of both parties. As a U.S. territory, Puerto Rico does not have access to municipal bankruptcy protection.

In Sunday's statement, GDB President Melba Acosta stressed the importance of a bankruptcy process for Puerto Rico, saying the GDB deal "would be highly unlikely" to work without one.

Creditors were expected to sue Puerto Rico over the legality of the GDB debt moratorium. But the agreement by the ad hoc group to hold off on legal remedies as sides continue to talk removes a potential key litigant. The group, which includes hedge funds like Fir Tree and Solus, is among GDB’s most well-heeled and organized creditor factions.

The GDB default is the most significant yet in Puerto Rico, because the bank acts as the main depositary and liquidity source for public agencies like the island’s highway and infrastructure authorities.

By Nick Brown - Reuters (Editing by Nick Zieminski)