August 20, 2009 / 7:20 PM / 11 years ago

Aerolineas Argentinas assets can't be seized-judge

NEW YORK, Aug 20 (Reuters) - A U.S. federal judge in New York rejected an effort to force Argentina’s state-controlled airline to turn over its U.S. assets to satisfy claims of bondholders who lost money in the country’s 2002 debt default.

Judge Thomas Griesa rejected the bondholders’ motion in a decision late Wednesday. He had had rejected a similar effort by the bondholders in April.

The plaintiffs had argued that Aerolineas is Argentina’s “alter ego” because the country owns nearly 100 percent of its stock, oversees the carrier’s operations actively, and has plowed hundreds of millions of dollars into Aerolineas.

Griesa said there is no evidence that Argentina agreed or intended for Aerolineas to act as its agent, or that it has excessive control over the carrier.

“The history of the airline’s conversion into a government instrumentality suggests that the Republic was merely trying to assure the company’s survival — not that it was using Aerolineas to shield the Republic from liability,” Griesa wrote.

“Indeed,” the judge added, “since the Republic has been pouring money into Aerolineas, this situation is the opposite of the typical alter ego relationship, where a sham entity is left underfunded by its principals.”

A lawyer for the bondholders declined to comment.

Argentina defaulted on roughly $100 billion of sovereign debt, but many creditors have refused to settle their claims.

The case is Seijas v. Republic of Argentina, U.S. District Court, Southern District of New York (Manhattan), No. 04-400. (Reporting by Jonathan Stempel; Editing by Gary Hill)

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