The US government said a bondholder’s lawsuit against Sri Lanka over the country’s historic debt default should be put on hold.
In a statement of interest filed Monday in New York federal court, the US backed the Sri Lankan government’s request to delay a lawsuit by Hamilton Reserve Bank Ltd. seeking full payment and accrued interest on more than $250 million in bonds that came due in July 2022. The US said the delay would help with ongoing restructuring talks between the South Asian country and other creditors.
Sri Lanka fell into default in May 2022 after the expiration of a 30-day grace period for missed interest payments on two of its sovereign bonds, the first debt default by the country since it gained independence from Britain in 1948. Hamilton Bank sued Sri Lanka in July 2022.
Sri Lanka in July asked US District Judge Denise Cote to put the case on hold for six months. Cote had put her decision on hold until the US decided whether or not to file a statement of interest.
The French and UK governments previously asked the court to put the suit on hold. The two countries said in a Sept. 6 letter that they were writing as members of the Paris Club, an informal group of official creditors that helps coordinate repayments for struggling debtor nations. They said delaying the case was “key to ensuring the success of the International Monetary Fund-supported assistance programme” for the nation.
