Tuesday, October 28, 2014

US judge Griesa rejects creditors' bid for Argentine funds held by BNY Mellon

A US judge refused today to require Bank of New York Mellon Corp to turn over to holders of defaulted Argentine bonds any of the $539 million the country deposited to pay creditors who participated in its past restructurings.

US District Judge Thomas Griesa in New York said since the funds were outside the United States in BNY Mellon's accounts at Argentina's central bank, turnover would not be authorized under the Foreign Sovereign Immunities Act.

"In dealing with what can be subjected to turnover, the FSIA simply does not mention property located outside the United States," Griesa wrote.

The motion was brought largely by various Italian citizens who purchased Argentina's bonds. Representatives for the bank, Argentina and the holdout bondholders seeking the handover did not respond to requests for comment.

The ruling came a week after a US appeals court dismissed Argentina's appeal of an order directing BNY Mellon to hold onto the $539 million, which the country deposited in June for bondholders who participated in two sovereign debt restructurings.

Griesa's decision to block the payment, which he called "illegal," sent Argentina on a course to default in July after no settlement was reached.