Creditor trustee in Alabama bankruptcy says no February 1 payment

BIRMINGHAM, Alabama Fri Feb 1, 2013 1:10pm EST

BIRMINGHAM, Alabama (Reuters) - A lawyer for the creditors trustee in America's biggest municipal bankruptcy on Friday said the trustee will not make a February 1 payment to owners of $3.14 billion of sewer debt issued by Alabama's Jefferson County.

Gerald Mace, an attorney for creditors trustee, Bank of New York Mellon, told a bankruptcy court hearing that the distribution could not be made because of a "lack of funds".

The size of the payments drawn from sewer system revenues varies and the amount of the expected payment was not known, county officials at the hearing said.

(Reporting by Melinda Dickinson in Birmingham and Michael Connor in Miami)

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