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Bank of N.Y. Can Join Argentine Bond Appeal, Court Says

Dec. 6 (Bloomberg) -- Bank of New York Mellon Corp., the trustee for Argentina’s restructured government bonds, can join the country’s appeal in a case involving its defaulted debt, a court said.

U.S. District Judge Thomas Griesa in Manhattan ruled Nov. 21 that Argentina must pay $1.3 billion claimed by holders of the defaulted debt into an escrow account by Dec. 15 if it made about $3 billion in scheduled payments on the restructured debt this month.

Bank of New York claims Griesa’s orders would force it to withhold payments it is obligated to make to the holders of Argentina’s restructured bonds if the country fails to pay holders of its defaulted debt. The U.S. Court of Appeals in Manhattan today said in a one-sentence order that the bank may file briefs as a nonparty in Argentina’s appeal.

The appeals court also today granted a request by holders of more than $1.6 billion in Argentina’s euro-denominated bonds to join the appeal as nonparties. The euro-bond holders claim Griesa’s rulings threaten their ability to collect payments on their investment.

A group of investors who traded their defaulted bonds for new bonds issued in two restructurings was earlier granted permission to join the appeal.

Argentina defaulted on $95 billion in debt in 2001. The country restructured most of that debt in bond-swap offers in 2005 and 2010.

Many of the holdouts, who declined to participate in the debt restructurings, have sued to enforce their rights to collect on the defaulted bonds. The holdouts include Paul Singer’s NML Capital Ltd. and Aurelius Capital Management.

The appeals court, which will hear oral arguments in the case Feb. 27, entered an order last week delaying the effect of Griesa’s orders while they’re being appealed.

The case is NML Capital Ltd. v. Republic of Argentina, 12-105, U.S. Court of Appeals for the Second Circuit (Manhattan).

To contact the reporters on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net.

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

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