Business

Argentina pulls US into debt dispute with hedge funds

Argentina is trying to rope Uncle Sam into its debt dispute with a group of “vulture” hedge funds.

The embattled country sued the US in the Hague, contending that America’s court system has “committed violations of Argentine sovereignty and immunities.”

The suit was filed in the International Court of Justice, which is the judicial organ of the United Nations. The Hague-based court said no action will be taken unless the US agrees to have the case heard in that court.

Argentina threatened to go after the US through international courts after exhausting all of its legal appeals here.

The South American defaulted on $13 billion of debt on July 30 after negotiations with a group of creditors led by hedge fund mogul Paul Singer collapsed.

Last year, Manhattan federal judge Thomas Griesa ruled that Argentina must pay bondholders who demand to be repaid in full — the so-called holdouts — whenever it makes a payment to the vast majority of bondholders who agreed to a debt swap worth about 30 cents on the dollar.

The unprecedented ruling prevented the country from making a June 30 payment of $539 million to those bondholders, even though Argentina had wired the money to Bank of New York Mellon, the exchange bondholders’ trustee.

On Wednesday, Griesa ruled that BoNY could hold onto the money while the matter is being resolved, as he has ordered Argentina and the holdouts to keep talking.

He also refused to fire the court-appointed mediator, Daniel Pollack. Last week Argentina demanded a new mediator, saying Pollack was biased against the nation.

Meanwhile, some exchange bondholders are still threatening to sue BoNY. Bondholders whose debt is denominated in euros argue that the US has no jurisdiction over their debt and that they may sue BoNY to get it.