A U.S. federal judge on Friday said a payment Argentina
deposited in an attempt to pay holders of the country's
restructured debt was illegal.
At a hearing, a lawyer for Bank of New York Mellon Corp. said
the government of Argentina on Thursday deposited $539 million in
both dollars and euros. The lawyer said BNY was aware of court
orders that barred payment to holders of restructured bonds and
that the money remains in the account.
U.S. District Judge Thomas Griesa said anyone who attempts to
pay these bondholders would be held in contempt of court.
"I will enter whatever order necessary to nullify this reported
payment by Argentina," Judge Griesa said at the hearing.
Judge Griesa said payments on local-law bonds, debt that is
governed by laws in Argentina, are allowed.
Argentina defaulted on about $100 billion of debt in 2001. The
country later offered holders of the defaulted bonds new securities
valued at about 33 cents on the dollar. Between the two swaps,
investors agreed to exchange almost 93% of the defaulted bonds.
But a small minority of bondholders, including NML Capital and
Aurelius, opted not to restructure their bonds and instead sued for
full repayment. The holdouts have won about $1.5 billion in court
awards in the case now before Judge Griesa.
Write to Christopher M. Matthews at
christopher.matthews@wsj.com
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