Bank of New York Mellon Corp. was ordered to retain a $539 million payment on Argentine bonds that a U.S. judge deemed illegal until he rules otherwise.
The bank had argued it will be exposed to lawsuits if it returns the money to Argentina. BNY Mellon, which acts as trustee for holders of restructured Argentine debt, asked U.S. District Judge Thomas Griesa in Manhattan what it should do with the June 26 payment, which the nation made to BNY Mellon accounts at the Central Bank of Argentina.
Argentina defaulted on a record $95 billion in debt in 2001. Griesa has ordered the country to pay holders of more than $1.5 billion in defaulted bonds when it makes a payment on its performing debt.
In June, Griesa blocked Argentina’s bid to make the $539 million payment on the 2033 debt, saying it was illegal. Argentina made the payment anyway, in violation of Griesa’s Feb. 23 ruling, the judge said today in his order.
“Argentina will take no steps to interfere with Bank of New York’s retention of the funds in accordance with the terms of this order,” he wrote. Griesa also wrote that BNY Mellon’s holding of the funds will not amount to a violation of any laws.
At a July hearing, BNY Mellon, the indenture trustee for Argentina’s exchange bonds, asked Griesa what it should do with the $539 million Argentine payment. Griesa urged the bank to work out a resolution with the bondholders.
Jonathan Blackman, a lawyer for Argentina, didn’t immediately respond to phone and e-mail messages after regular business hours seeking comment on today’s ruling.
The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).