* Two investment funds, Contrarian Capital Management (CCM) and Grantham Mayo Van Otterloo & Co (GMO), have filed a legal complaint against the Ecuadorean state at a New York federal district court, accusing the Ecuadorean government of “
market fraud” and “
coercive exchange” in relation to the
ongoing debt restructuring negotiations. CCM and GMO, who hold 3% of the US$17.4bn in debt currently under negotiation, formed part of the group of bondholders known as the ‘Steering Committee’, whose counter-proposal was rejected by Ecuador on 28 July. Ahead of the 31 July deadline to finalise an agreement, the Ecuadorean government nonetheless appears well set to secure the 66% support needed to secure a general agreement. This lawsuit therefore seeks to suspend the process, alleging that restructuring this debt without the consent of all bondholders represents illegal coercion. Ecuador’s economy ministry has condemned this “
aggressive” attempt to secure “
preferential treatment”, and insisted that “
we will not give in to this attempt to boycott the process”, which “
could cause a serious setback in the country’s economic and health recovery”, putting at risk “
the future of millions of Ecuadoreans”.
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