New York: The American Bankers Association, a trade association representing the financial services industry in the US, asked a court to overturn orders it claims improperly handcuff Bank of New York Mellon Corp in litigation over Argentina’s defaulted debt.
In a court filing today, the ABA asked the US Court of Appeals in New York to reverse rulings by US District Judge Thomas Griesa, which the group claims would interfere with the bank’s role as indenture trustee for Argentina’s restructured debt. The court will hear arguments in the case on February 27.
“Permitting injunctions against these trustees that preclude them fulfilling their pre-existing obligations whenever expedient to enforce a judgment against the debtor will have significantly adverse consequences for the financial system,” the ABA said in its brief.
Today is the deadline for the filing of so-called amicus, or friend-of-the-court, briefs, in which non-parties to an appeal submit arguments that may be helpful to the court, with the court’s permission. The ABA filed its arguments and asked the court to consider them in Argentina’s appeal.
Kenneth Dam, a former Treasury Department official, submitted a brief supporting Griesa’s rulings. Alfonso Prat-Gay, a former governor of Argentina’s central bank, asked the court to consider a brief supporting his country’s position. The Clearing House Association LLC, a US banking association and payments company, urged the court to overrule Griesa.
Briefs were also filed by investors holding Argentina’s restructured debt and holders of the defaulted bonds who aren’t parties in the appeal.
Argentina last week filed its own brief asking the appeals court to reverse Griesa’s rulings, which would help Elliott Management Corp’s NML Capital Fund and other creditors collect on the country’s defaulted bonds.
Argentina, which defaulted on a record $95 billion of debt in 2001, argued that Griesa’s rulings illegally interfere with its immunity as a sovereign nation and improperly exert authority over third parties, including Bank of New York Mellon.
On October 26, the appeals court ruled that Argentina can’t treat holders of its restructured debt more favourably than the so-called “hold-out” creditors, who declined to participate in two rounds of debt restructuring.
The appeals court also sent part of the case back to Griesa, who then ordered Argentina to make a $1.3 billion payment into escrow, the amount claimed by the defaulted bondholders in the case, when it makes scheduled payments on its restructured bonds. Griesa also barred third parties, including banks, from helping Argentina evade his orders.