The US District Court for the Southern District of New York has issued a fourth extension of the stay in the ongoing litigation between Sri Lanka and Hamilton Reserve Bank (HRB). The stay, now effective until 15 January 2025, acknowledges Sri Lanka’s significant advancements in its debt restructuring efforts.
The prior stay, which was set to expire on 30 November 2024, prompted Sri Lanka to file a motion on 26 November requesting an extension. In an order dated 20 December, Judge Denise L. Cote granted Sri Lanka’s request, retroactively applying the stay extension through 15 January 2025.
Judge Cote remarked in her order, “The relevant factors have consistently weighed heavily in favor of the stay throughout this period. These stays have facilitated the reorganization of Sri Lanka’s sovereign debt. As stated in the 2023 stay opinion, even if Hamilton prevails on its claim, any judgment would include pre-judgment interest. Hamilton has not demonstrated any specific prejudice it would face from the extension and asserts that Sri Lanka’s debt restructuring will not impact its claims in this case.”
On 16 December, Sri Lanka filed a Reply Memorandum of Law supporting its motion, highlighting that the country’s exchange offer and consent solicitation had garnered robust bondholder participation. Sri Lanka indicated that the successful conclusion of its sovereign debt restructuring was imminent.
The filing further revealed that for the 2022 bonds, holders of 73% of the outstanding principal amount had agreed to the exchange, accounting for nearly all the bonds except for approximately 25% claimed by HRB. Additionally, holders of more than 95% of the outstanding principal amount across Sri Lanka’s other international sovereign bond series had provided favorable instructions. Sri Lanka credited the court’s ongoing stays over the past year for these positive outcomes.
The country also informed the court that the exchange transaction was scheduled for settlement on 20 December 2024. Eligible bondholders would receive considerations in the form of exchange fee bonds, with the expected maturity date set for 27 December 2024 or shortly thereafter. Sri Lanka assured the court that it was working diligently with its advisers to finalize the process and planned to provide an update on 6 January 2025, by which time it anticipated confirming the successful conclusion of the debt restructuring.
This marks the fourth stay granted by the US District Court in the litigation initiated by HRB. The first stay, approved on 1 November 2023, lasted until 29 February 2024. Subsequent extensions were granted on 23 April 2024 and 15 November 2024, respectively, in response to motions filed by Sri Lanka.
In a related development, HRB had consented on 14 August 2024 to a continuation of the stay until further progress was made. The ongoing cooperation underscores the shared recognition of the importance of Sri Lanka’s debt restructuring process and its implications for both parties.
