Sri Lanka seeks five-month hold on bondholder suit

Sri Lanka is seeking a five-month hold on a lawsuit filed by a bondholder over the country’s historic debt default, telling a New York federal judge that it wants more time to negotiate with private creditors.

The island nation was sued in July 2022 by Hamilton Reserve Bank Ltd., which sought full payment on more than $250 million of Sri Lanka’s dollar bond that was due that month. The bank says it holds more than 25% of the bonds, which would likely enable it to block any modification of the notes.

On Friday, Sri Lanka sought an extension of a delay of the lawsuit that was granted in November. Hamilton Reserve opposed the new request, saying that the country has kept the bank “in the dark” about the negotiations despite repeated requests for information.

The island nation is prioritizing restructuring obligations to its private creditors as it seeks to fast-track a debt overhaul and exit a sovereign default, the foreign minister told Bloomberg last month.

The case is Hamilton Reserve Bank v. Sri Lanka, 22-cv-5199, US District Court, Southern District of New York (Manhattan).

(Source: Bloomberg)