Argentina Loses Motion to Dismiss Suit Over Central Bank

Argentina lost a bid to throw out a suit in which holders of the nation’s defaulted bonds are seeking a court order to help them seize assets held by the country’s central bank.

U.S. District Judge Thomas Griesa today denied Argentina’s request that he dismiss a suit by NML Capital Ltd. and EM Ltd. asking for a declaration that the Banco Central de la Republica Argentina is an “alter ego” of the country, and therefore liable to pay them almost $2.6 billion.

“I think there is a very legitimate claim by the plaintiffs here that, for certain purposes, BCRA is the alter ego of the Republic,” Griesa said at a hearing today in Manhattan federal court.

Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount. Some holdout investors have won court judgments against Argentina from the New York court and are trying to find assets they can seize to enforce them.

The case is EM Ltd. v. Banco Central de la Republica Argentina, 06-cv-07792, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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