France and the United Kingdom (UK) have jointly made a request in favour of Sri Lanka to the court of the Southern District of New York, for a six-month freeze on any litigation in the Hamilton Reserve Bank case until Sri Lanka’s external debt restructuring is completed, the Financial Times reported.

Accordingly, last week the two countries filed a joint “amicus curiae” to the New York judge hearing the case, arguing in favour of Sri Lanka’s request for a six-month freeze on any litigation.

The co-signatories in their “amicus curiae” want the judge to grant Sri Lanka the six-month stay it has requested, because they worry that the lawsuit by Hamilton Reserve Bank/Benjamin Wey could wreck ongoing restructuring talks.

France and UK have jointly made a request to the court of the Southern District of New York, for a six-month freeze on any litigation in the Hamilton Reserve Bank case until Sri Lanka’s external debt restructuring is completed.

“A judgement in favour of the plaintiff before the completion of the debt restructuring process would risk disrupting the ongoing negotiations by creating an incentive for holdout creditors, thereby jeopardising the comparability of treatment between different categories of creditors,” the filing said.

It also said that the relevant principle is at the core of all sovereign debt restructuring processes, as it is key to securing the consent of all creditors, and that disruption would lead to delays in the negotiations, delaying the cash disbursement by the International Monetary Fund to the debtor country and resulting in significant costs for Sri Lanka and the official creditors’ taxpayers.

France is naturally interested in the Sri Lanka lawsuit as it hosts the so-called Paris Club, where government-to-government debts are restructured. The UK is part of the Paris Club but presumably cosigned the amicus brief because it historically oversaw the London Club, the less formal group for private creditors to negotiate with sovereign borrowers.

Last month, the Financial Times also reported that the United States (US) Government has also intervened in the matter where “the US is actively considering whether to file a Statement of Interest with respect to the pending motion to stay”.

The Hamilton Reserve Bank vs. Government of Sri Lanka case was filed in June 2022 after Sri Lanka declared bankruptcy and defaulted on $ 1 billion of this particular bond issue, of which Hamilton Reserve Bank holds $ 250 million.

Source : The Morning

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London (05/11 – 44.44)

Benjamin Wey, a Chinese-American financier, founder of Fintech Holdings and a history of legal trouble, is suing Sri Lanka for $250 million. Wey claims that he was assured by Sri Lanka’s central bank governor that the country would repay a $250 million bond. However, Sri Lanka defaulted on the bond in April 2022.

Wey is seeking to collect the full amount of the bond, plus interest. He has filed a lawsuit in the US District Court for the Southern District of New York.

The lawsuit is a major setback for Sri Lanka, which is already facing a severe economic crisis. The country is struggling to repay its debts, and the lawsuit could make it even more difficult to secure a bailout from the International Monetary Fund (IMF).

The US government has intervened in the lawsuit, and it is unclear how the case will be resolved. However, it is likely to drag on for several years, and it could further destabilize Sri Lanka’s economy.

Notorious financier, Benjamin Wey wants to collect from Sri Lanka, the full amount of the $250 million bond plus interest. He has filed a lawsuit in the US District Court for the Southern District of New York.

Wey is a controversial figure. He was arrested in 2015 on charges of fraud, but the charges were dropped. He was also sued for sexual harassment, and he settled the case for $5.65 million.

Wey is the founder of Fintech Holdings, a holding company that owns several businesses, including Hamilton Reserve Bank (HRB). HRB is the entity that is suing Sri Lanka.

Sri Lanka is facing a severe economic crisis. The country is struggling to repay its debts, and it has been forced to default on several bonds. The crisis has led to widespread shortages of food, fuel, and other essential goods.

The IMF has offered to bail out Sri Lanka, but the government has been slow to agree to the IMF’s terms. The lawsuit filed by Wey could further complicate the negotiations with the IMF.

It is unclear how the lawsuit will be resolved. However, it is likely to drag on for several years. The case is complex, and there are many legal issues that need to be resolved.

The lawsuit could also have a significant impact on Sri Lanka’s economy. If Wey is successful, it could force the country to default on even more debt.

This could further destabilize the economy and make it even more difficult for Sri Lanka to recover from the crisis.

The lawsuit is a major setback for Sri Lanka, but it is also a test of the country’s legal system. If Sri Lanka is able to defend itself against the lawsuit, it will send a message to other investors that the country is a safe place to do business.

The outcome of the lawsuit will also have implications for the IMF. If the IMF is seen as being unable to protect its borrowers from predatory lawsuits, it could discourage other countries from seeking bailouts from the IMF.

The lawsuit is a complex and far-reaching case. It will be interesting to see how it is resolved and what impact it has on Sri Lanka, the IMF, and the global economy.

Source : Lanka News Line

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