Italian Creditors Lose Bid to Seize Argentina Payment
A group of Italian investors seeking payment of their defaulted Argentine bonds lost a bid to collect a portion of $539 million the South American country deposited in Bank of New York Mellon Corp.
The judge overseeing Argentine bond litigation in New York rejected the claim today, ruling sovereign funds located outside the U.S. are immune from seizure. U.S. District Judge Thomas Griesa said the Foreign Sovereign Immunities Act, which limits the ability of people to sue foreign governments, doesn’t permit the investors to seize the funds.
Argentina defaulted on a record $95 billion in 2001, roiling international markets and limiting the nation’s access to credit. Argentina exchanged 92 percent of its defaulted bonds for new ones, at a sharp discount, in restructurings in 2005 and 2010. The Italian investors said they bought the bonds when they were issued and didn’t agree to exchange them for the new bonds.
A group hedge funds, led by Paul Singer’s Elliott Management Corp., is also trying to receive full payment for their defaulted bonds. Griesa ruled that Argentina can’t pay holders of its restructured debt without also paying defaulted bondholders.
Argentina transferred the $539 million to BNY Mellon, the trustee for the restructured bonds, in June. Griesa ruled the payment was an illegal attempt to pay the restructured bondholders. BNY Mellon held the payment, in compliance with Griesa’s rulings, triggering a default when the bondholders weren’t paid by July 30.
The case is Applestein v. Republic of Argentina, 02-cv-04124, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Bob Van Voris in federal court in Manhattan atrvanvoris@bloomberg.net
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Peter Blumberg, Andrew Dunn
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