- New York trustee barred by U.S. judge from paying debtholders
- Argentina cited lack of detail in invoices, BNY Mellon said
Bank of New York Mellon Corp. claims Argentina owes $1.78 million for costs it incurred while stuck in the middle of litigation between the South American nation and holders of its defaulted debt.
The New York-based trustee bank is barred by a U.S. court from passing on payments to holders of Argentina’s restructured debt until it settles with holders of the defaulted bonds. In addition to having to defend its interests in that case, BNY Mellon was sued in several countries by creditors who claim the bank failed in its obligation as bond trustee. It has also fought Argentine decrees stripping it of its bank license and role of trustee.
BNY Mellon has submitted 69 invoices since October 2014 that Argentina has refused to pay, according to a Sept. 10 letter reviewed by Bloomberg News. The terms of Argentina’s bond indenture show the country must reimburse the bank for expenses incurred performing its duties and indemnify the bank against any liabilities arising from from its connection to the indenture, BNY Mellon’s senior counsel Judd Henry wrote to senior officials at Argentina’s Economy Ministry.
The trustee had demanded “that the Republic honor all requests for indemnification and pay all outstanding invoices in full” by Oct. 1 or the bank will take remedial action, Henry said. “There is no legitimate basis for the Republic to withhold payment now.”
A press official at Argentina’s economy ministry didn’t immediately reply to a request for an update on the situation. Mike Dunn, a spokesman at BNY Mellon, declined to comment on the letter.
Argentina has refused to compensate BNY Mellon because the invoices lack sufficient detail, according to the letter. The bank refuted that claim, citing Argentina’s reimbursement of 55 other invoices in the past three years that included the same amount of detail as those that had gone unpaid.