US Court orders SL, Hamilton Reserve Bank to submit joint status letter by 12 May

Monday, 24 April 2023 02:54 - - {{hitsCtrl.values.hits}}

The United States District Court, Southern District of New York last week ordered the Sri Lankan Government and its sovereign bondholder Hamilton Reserve Bank (HRB) to submit a joint status letter by 12 May 2023.

The decision by US District Judge Denise Cote follows a conference held involving the two parties on 20 April.

The Government in early April in its answers to HRB’s Amended Complaint, denied almost all the allegations.

Via its attorneys Clifford Chance US LLP, the Government said the Plaintiff HRB’s claim is barred, in whole or in part, by reason of Sri Lanka’s sovereign immunity. Furthermore the Plaintiff’s claim is barred, in whole or in part, because Plaintiff lacks standing to sue and Plaintiff’s claim is barred, in whole or in part, and/or should be stayed, on the grounds of international comity.

Therefore, Sri Lankan Government respectfully requested the US Court to dismiss HRB’s Amended Complaint with prejudice or, in the alternative, staying proceedings; as well as award Defendant its costs, attorneys’ fees, and such other and further legal and equitable relief as the Court may deem just and proper.

The Daily FT on 10 April exclusively reported (https://www.ft.lk/top-story/SL-s-external-debt-restructuring-bid-suffers-blow/26-747259) United States District Court, Southern District of New York decision to deny Sri Lanka Government’s motion to dismiss the case filed by HRB.

HRB owns over $ 250 million in principal amount of the $ 1 billion worth International Sovereign Bonds (ISBs) issued in 2012. The Bonds matured on 25 July 2022. Hamilton alleged that as a result of Sri Lanka’s default, it is owed $ 250.19 million in principle and $ 7.349 million in accrued interest (before accounting for pre-and post-judgement interest).

HRB, represented by Bleichmar Fonti and Auld LLP and Jenner and Block LLP, initiated this action on 21 June 2022 after which on 21 September Sri Lanka filed a motion to dismiss the complaint.

Sri Lanka in mid-April announced a moratorium on foreign debt repayments including the Bonds and since then has made no payments on the Bonds.