BRADENTON, Fla. — Emmet & Co. and First Manhattan Co. have filed suit against Catholic Health East and Merrill Lynch claiming that $132.26 million of escrowed bonds issued by conduit entities in three states were improperly called.

CHE in March gave bondholders a choice: accept a tender offer at 101 or submit to mandatory redemption at par. Those who accepted the tender offer had to agree to a waiver giving up certain rights, and were told that tendered bonds would remain outstanding.

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