MercoPress. South Atlantic News Agency

US Supreme Court rejects Argentine appeal to unfreeze assets held in trust

The US Supreme Court on Tuesday rejected Argentina's appeal in its long-running legal effort to unfreeze some assets held in trust since 2007, following on its roughly 100 billion US dollars debt default five years earlier.

Without comment, the high court refused to hear Argentina's appeal in a one-line order. The justices declined to review a ruling in August by a U.S. appeals court in New York upholding a federal judge's order allowing the assets to stay frozen.

That order had been sought by two big Argentina debt holders -- EM Ltd, controlled by the investor Kenneth Dart, and NML Capital Ltd, an affiliate of Elliot Management Corp.

The trust had been established in 1999 to hold American Depositary Shares (ADR) being issued by Banco Hipotecario, a state-owned lender that was being privatized. It held about 90 million US dollars of assets at the time of the 2007 order and is administered by US Bank Trust NA.

NML, in a statement e-mailed to reporters, said it believes the value of ADRs are worth approximately 70 million USD.

The appeals court ruled while the trust was purportedly established under Argentine law, it would violate New York law to recognize it because it gave Argentina the authority to direct its use “for its own benefit” at the expense of creditors.

Argentina argued in its Supreme Court appeal that the lower court should have applied the laws of Argentina, not the laws of New York, when it allowed the funds to attach claims to the Argentine assets.

NML said it will now start the process of liquidating the ADRs, “in partial satisfaction of NML's more than 2 billion USD in judgments and claims against Argentina.”

“So far as NML knows, this will be the first significant recovery by any of the hundreds of creditors who have sued Argentina in the wake of its debt default in 2001 -- the largest sovereign default ever,” the statement said.