A U.S. appeals court on Wednesday dismissed the Argentine government's appeal of an order directing Bank of New York Mellon Corp to hold onto 539 million dollars the country deposited for its restructured bondholders.
The 2nd U.S. Circuit Court of Appeals in New York in a brief order said it lacked jurisdiction over the appeal as the August ruling by U.S. District Judge Thomas Griesa was a clarification rather than modification of his earlier rulings on the matter.
Griesa had ruled that the 539 million that Argentina deposited in June with BNY Mellon for bondholders who participated in two sovereign debt restructurings was illegal, and in an August order, directed the bank to retain the funds. The judge, in his August ruling, also said BNY Mellon's retention of the funds would not violate his prior orders or subject it to liability.
Argentina was declared in technical default in July after refusing to honor court orders to pay 1.33 billion plus interest to U.S. hedge funds suing for full payment on bonds following its earlier 2002 default.
The hedge funds, led by NML and Aurelius Capital Management, had spurned the country's 2005 and 2010 debt restructurings, which resulted in exchanges for about 92% of the country's defaulted debt. Investors who exchanged bonds were paid less than 30 cents on the dollar.
Argentina's most recent default came after the U.S. Supreme Court declined to hear Argentina's appeal of a ruling that it must pay the holdouts when it paid holders of the exchanged bonds.
Griesa subsequently blocked BNY Mellon from processing a 539 million interest payment on what Argentina says is over 28 billion in debt. The order sent Argentina on a course to default after no settlement was reached.
A later order, the one Argentina appealed, set out BNY Mellon's responsibilities to hold onto the money. Judge Griesa said BNY Mellon's retention of the funds would not violate his prior orders or subject it to liability.