- Proceedings stayed until 15 Jan. 2025
- SL to update court on 6 Jan. 2025
- Exchange fee bonds granted to bondholders
The US District Court for the Southern District of New York has granted a fourth stay on proceedings until 15 January 2025 in the ongoing litigation between Sri Lanka and Hamilton Reserve Bank (HRB), citing the considerable progress the country had made in its debt restructuring process.
With the previous stay on the proceedings instituted by HRB, scheduled to expire on 30 November this year, Sri Lanka filed a motion on 26 November 2024 seeking an extension of the stay until 15 January 2025.
Thereafter, by an order dated 20 December, the US District Court for the Southern District of New York allowed Sri Lanka’s motion dated 26 November and granted nunc pro tunc an extension of the stay on the matter through 15 January 2025.
In her order, Judge Denise L. Cote held: “The relevant factors have continued throughout this entire period to weigh heavily in favour of the stay. These stays have assisted in the reorganisation of the sovereign debt of Sri Lanka.
“As noted in the 2023 stay opinion, if Hamilton prevails on its claim, any judgment will be subject to pre-judgment interest.
“Hamilton does not identify any specific prejudice it will face from extending the current stay into January. Indeed, it takes the position that the restructuring of Sri Lanka’s debt ‘will have no impact’ on its claims in this action.”
On 16 December, Sri Lanka filed a Reply Memorandum of Law in support of its motion on 26 November informing the court that the exchange offer and consent solicitation had received overwhelmingly strong bondholder participation and therefore the successful conclusion to Sri Lanka’s sovereign debt restructuring process was only a few weeks away.
Sri Lanka had further proposed to provide the court with an update on 6 January 2025, by which time the country expected to be able to confirm the successful conclusion of the process.
“For the 2022 bonds, holders of 73% of the outstanding principal amount have agreed to the exchange. This accounts for nearly all of the outstanding principal amount of the 2022 bonds except for the roughly 25% that HRB claims to own.
“As to Sri Lanka’s various other international sovereign bond series, holders of more than 95% of the outstanding principal amount have provided favourable instructions. These positive results have been made possible by the court’s continued stays of proceedings over the past year.”
Sri Lanka had further stated that the exchange transaction would be settled on 20 December, whereupon eligible bondholders would receive certain considerations in the form of exchange fee bonds, with the expected maturity date of those bonds to be “27 December 2024 (but not less than seven calendar days after the settlement date), or as soon as practicable thereafter”.
Accordingly, Sri Lanka claimed that, together with its advisers, it was diligently working to finalise these remaining steps and that considering the potential for administrative delay, particularly at year-end, it would provide an update to the court on 6 January 2025, by which time it expected to be able to confirm that the process had reached a successful conclusion.
On 1 November 2023, Sri Lanka’s motion for a stay was granted and the litigation was accordingly stayed until 29 February this year. Thereafter, the US District Court for the Southern District of New York granted further stays on 23 April 2024 and 15 November 2024, respectively, based on motions filed by Sri Lanka.
Meanwhile, HRB too consented on 14 August this year to the continuation of the stay until 30 September.