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

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...