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Hunting Titans: RPC fails to convince judge to order BNY Mellon to release Argentinian bondholders

The battle between Argentinian bondholders and the South American government rattles on after RPC failed to convince a High Court judge to order the trustee, The Bank of New York Mellon (BNY Mellon), to release $257m to four holdout investors.

George Soros’s Quantum Partners, Knighthead Master Fund, RGY Investments and Hayman Capital Master Fund had been seeking to have the judge declare that BNY Mellon pay the holdout investors, confirm that Argentina’s English law bonds are governed by English law and request that he tell the bank to show a copy of the judgment to a US court currently stopping Argentina from paying out the bonds.

Mr Justice David Richards said ordering the BNY Mellon to pay the holdouts would ‘would be in breach of trust’ and ‘serves no useful purpose’.

While the judge did rule that the bonds in the trust are governed by English law, he refused to order the bank to show his judgment on the matter to the US court.

He explained: ‘The claimants are critical in some respects of the conduct of the trustee in the US proceedings. I do not propose to enter into a discussion of those criticisms. I am in no doubt that the trustee is conscious of its obligations as trustee but equally it is conscious, as it must be, of the delicate position in which it finds itself as a trustee subject to the personal jurisdiction of the US courts’

He added: ‘I am not satisfied that the trustee’s conduct of the litigation has been outside the reasonable range of possible approaches.’

Tom Hibbert, a partner at RPC, and Latham & Watkins‘ former vice-chair of global litigation John Hull, were representing the four holdout investors. They instructed Mark Hapgood QC of Brick Court Chambers and David Quest QC of 3 Verulam Buildings.

Andrew Denny, a London litigator at Allen & Overy, advised BNY Mellon on the proceedings and instructed Robert Miles QC of 4 Stone Buildings.

The bondholders said in a statement: ‘The Honourable Mr Justice David Richards today made an important Declaration in the Chancery Division of the High Court in London that the sum of €225 million transferred by the Republic of Argentina to the account of the trustee (BNY Mellon) with Banco Central de la República Argentina on 26 June 2014 is held on trust and that the trust is governed by English law.’

‘The Claimant Euro Bondholders are very pleased with the English Court’s decision, which represents a significant step forward in the defence of their interests under the English law Trust. They have been deeply concerned that their legitimate English law proprietary interests in the payments have not been taken into account in the on-going US litigation. They now hope that this declaration can be brought to the attention of the appropriate Courts at the first available opportunity and that those courts will have regard to the decision of the English Court.’