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May 15 (Reuters) - Puerto Rico's defunct Government Development Bank, once the primary fiscal agent for the U.S. territory struggling with $70 billion in debt, has reached a liquidation deal with its creditors, a source with direct knowledge of the discussions said on Monday.
The deal would be executed through a so-called Title VI proceeding under PROMESA, the federal Puerto Rico rescue law, avoiding a protracted Title III bankruptcy, said the source, who declined to be named because the deal was not yet public. It would split GDB's assets into two separate entities, one for bondholders and municipal depositors, and one for all other depositors. (Reporting by Nick Brown in New York; Editing by Chizu Nomiyama)