Hedge Funds Win, Lose Court Cases Against Argentina

Jul 6 2011 | 11:24am ET

Two hedge funds battling with Argentina over its debt default nine years ago enjoyed a  court victory and suffered a legal defeat on either side of the Atlantic this week.

Yesterday, a federal appeals court in New York said that Elliott Management and NML Capital cannot seize $105 million of assets held by the Argentine central bank at the Federal Reserve Bank of New York. The ruling, overturning a lower-court decision from last year, held that the Banco Central de la Republica Argentina is covered by the U.S. Foreign Sovereign Immunities Act.

The hedge funds had sought to seize the assets after a 2006 ruling that Argentina, which has settled the defaulted bonds with more than 90% of their holders, had to pay Elliott and NML the full value of the bonds plus unpaid interest, a total of $284 million.

The president of the Banco Central, Mercedes Marco Del Pont, said she expects Elliott and NML to appeal the appeals court decision to the U.S. Supreme Court.

At another supreme court today, the hedge funds won a major victory to help offset their U.S. defeat. The U.K. Supreme Court took the opposite view to the New York court, ruling that NL can use the U.S. judgment to seize Argentine assets in the U.K., rejecting Argentina's argument that British courts had no jurisdiction.

Argentina had waived some sovereign immunity rights when it sold the bonds.


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Looking For A Hedge Fund Manager? Try Davos

Jan 28 2015 | 8:48am ET

Davos, Switzerland seems to have become the hedge fund capital of the world—at...

Guest Contributor

From Switzerland With Love: Some Hard Truths About Central Banks And Risk

Jan 23 2015 | 7:54am ET

In the wake of the Swiss National Bank uncoupling the country’s currency from...

 

Editor's Note