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

Creating An Offshore Hedge Fund Dream Team: The Seven Key Players

Jun 26 2015 | 6:47am ET

If you want to set up an offshore hedge fund, like any great team, you’re only...

Lifestyle

Hedgies Set to Compete in Wall Street Decathlon

Jun 8 2015 | 12:37am ET

The Wall Street Decathlon — a 10-event physical challenge that will crown “Wall...

Guest Contributor

6 Essential Principles To Balance Your Investment Risk

Jun 26 2015 | 10:07am ET

In this article, financial expert Greg Silberman explores how to hedge a private...

 

Editor's Note