Hedge Funds Win Freeze Of Argentine Bank Assets

Sep 17 2008 | 10:45am ET

A pair of hedge funds seeking to recoup their losses from Argentina’s default on its debt six years ago has convinced a judge to freeze some US$70 million in an Argentine state-owned bank.

While U.S. District Judge Thomas Griesa in Manhattan has not made the ruling public, one of the hedge funds, NML Capital, said that Griesa last Friday granted the attachment of some assets of the New York branch of Banco de la Nacion. The attachment order was also granted to hedge fund EM Ltd.

NML, which is affiliated with Elliott Management, said in a statement that Banco de la Nacion “is controlled so completely by the Government of the Republic of Argentina that it lacks a separate identity and functions as an alter ego of the Argentine state.”

“As a result,” NML argued, “its assets are subject to attachment in satisfaction of legal judgments against the Republic.”

Banco de la Nacion denied that it is merely an arm of the Argentine government, saying in a statement that it has “its own legal identity… not integrated with the public sector.” The bank says it will contest Judge Griesa’s ruling.

NML and EM are among the roughly 25% of holders of the $100 billion in sovereign debt Argentina defaulted on in 2002 not to accept a deal from the government.

 


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