By Saabira Chaudhuri and Nicole Hong
Bank of New York Mellon Corp. on Thursday said it is continuing
to keep the money deposited by Argentina in June to pay certain
bondholders, after a U.S. District Court ruling has ruled that BNY
is not allowed to transfer the money to bondholders until Argentina
pays its holdout creditors.
The trust bank said it hasn't received a court order to return
the money.
Argentina's talks with its bondholders collapsed late Wednesday,
leaving the nation on the brink of its second default in 13 years.
Argentina has been embroiled in a yearslong battle with a small
group of hedge funds that have demanded full payment for bonds the
country defaulted on in 2001. Argentina has refused to pay, despite
an order by a U.S. District Court Judge Thomas Griesa requiring it
to pay the hedge funds. The issue came to a head Wednesday as
Argentina missed a deadline to make a payment it owed to other
bondholders, because the court order had prevented such a move
On June 26, Argentina deposited $539 million at BNY Mellon for
an interest payment on restructured bonds governed by U.S. and U.K.
law. Judge Griesa has since said the deposit was illegal because
U.S. courts have ruled that Argentina cannot pay restructured
bondholders until it compensates holdout creditors. Holders of the
U.K., Argentine and Japanese law bonds have argued their debt falls
outside the scope of Judge Griesa's rulings.
At the start of July, the holdout creditors filed an order to
compel BNY Mellon to return the money to Argentina. BNY Mellon in
turn filed a motion asking that it be allowed to keep the money to
prevent exposing the bank to lawsuits from bondholders. The court
hasn't yet ruled on that motion, says BNY Mellon.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com and
Nicole Hong at nicole.hong@wsj.com
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