BUENOS AIRES—The U.S. government on Friday came down squarely in Argentina’s favor in its litigation with holdout creditors suing the South American country over its defaulted bonds.
The U.S. Attorney General’s office argued an appellate court should convene the full chamber of justices to consider overturning a ruling blocking Argentina from paying creditors who accepted its discounted debt swap until it pays those who rejected the restructuring.
«By unduly restricting the immunity afforded to foreign state property, the decision not only contradicts this Court’s precedent, but could adversely affect U.S. foreign relations and threaten U.S. government assets,» the U.S. Attorney General’s office said in a friend-of-the-court brief filed with the Second Circuit court of appeals in New York Friday.
«While the United States does not condone Argentina’s actions in the international financial arena, Argentina’s petition for rehearing en banc presents a ‘question of exceptional importance,’ and rehearing is needed to secure the uniformity of the court’s decisions.Accordingly, the petition should be granted,» the Attorney General’s office said in the brief.
Argentina is currently appealing a panel ruling from the Second Circuit that upheld a lower court ruling saying Argentina must either pay all creditors under New York law or none. Argentina has asked the appellate court to convene the full panel of appellate court justices to reconsider what the smaller panel ruled.
«The panel in this case adopted a novel interpretation of a standard pari passu clause found in many sovereign-debt instruments, in a manner that runs counter to longstanding U.S. efforts to promote orderly restructuring of sovereign debt,» the U.S. government said in the brief. A pari passu clause requires all creditors to be treated equally.
The holdout creditors are led by Elliott Management Corp.’s NML Capital Ltd., a group founded by U.S. billionaire Paul Singer, and Aurelius Capital.
The cases stem from Argentina’s sovereign default in 2001. About 93% of the almost $100 million of defaulted bonds were tendered in 2005 and 2010, but a few holdouts did not accept the deal that offered just 33 cents on the dollar and have dogged Argentina in courts across the globe to collect the full value of the bonds.
In a separate filing Friday, Argentina said that it is willing to send a law to its legislature to re-open another round of the swap offer, but that its laws will not allow the holdouts to receive more than those who accepted the restructuring.
New York federal Judge Thomas Griesa has awarded the holdouts about $1.3 billion in awards, a sum that Argentina has vowed not to pay and to appeal to the U.S. Supreme Court if necessary.
The U.S. Second Circuit Court of Appeals decided Nov. 28 to temporarily suspend the ruling, which had jeopardized over $3 billion in bond payments due in mid-December. The Second Circuit has set a Feb. 27 hearing date to consider Argentina’s request for a rehearing.
On Friday, Argentina also asked for the case to be sent to New York state court rather than to continue to move through federal courts, a move that could push back a potential Supreme Court showdown.
Joining the case to argue for the Second Circuit to overturn the ruling are bondholders who accepted the swaps led by Gramercy Funds Management LLC, a creditor with more than $1 billion of the restructured bonds, and Fintech Advisory Inc. Argentine investment-fund manager Puente has also been admitted as a party to the case.
—Chad Bray contributed to this article.
The U.S. Attorney General’s office argued an appellate court should convene the full chamber of justices to consider overturning a ruling blocking Argentina from paying creditors who accepted its discounted debt swap until it pays those who rejected the restructuring.
«By unduly restricting the immunity afforded to foreign state property, the decision not only contradicts this Court’s precedent, but could adversely affect U.S. foreign relations and threaten U.S. government assets,» the U.S. Attorney General’s office said in a friend-of-the-court brief filed with the Second Circuit court of appeals in New York Friday.
«While the United States does not condone Argentina’s actions in the international financial arena, Argentina’s petition for rehearing en banc presents a ‘question of exceptional importance,’ and rehearing is needed to secure the uniformity of the court’s decisions.Accordingly, the petition should be granted,» the Attorney General’s office said in the brief.
Argentina is currently appealing a panel ruling from the Second Circuit that upheld a lower court ruling saying Argentina must either pay all creditors under New York law or none. Argentina has asked the appellate court to convene the full panel of appellate court justices to reconsider what the smaller panel ruled.
«The panel in this case adopted a novel interpretation of a standard pari passu clause found in many sovereign-debt instruments, in a manner that runs counter to longstanding U.S. efforts to promote orderly restructuring of sovereign debt,» the U.S. government said in the brief. A pari passu clause requires all creditors to be treated equally.
The holdout creditors are led by Elliott Management Corp.’s NML Capital Ltd., a group founded by U.S. billionaire Paul Singer, and Aurelius Capital.
The cases stem from Argentina’s sovereign default in 2001. About 93% of the almost $100 million of defaulted bonds were tendered in 2005 and 2010, but a few holdouts did not accept the deal that offered just 33 cents on the dollar and have dogged Argentina in courts across the globe to collect the full value of the bonds.
In a separate filing Friday, Argentina said that it is willing to send a law to its legislature to re-open another round of the swap offer, but that its laws will not allow the holdouts to receive more than those who accepted the restructuring.
New York federal Judge Thomas Griesa has awarded the holdouts about $1.3 billion in awards, a sum that Argentina has vowed not to pay and to appeal to the U.S. Supreme Court if necessary.
The U.S. Second Circuit Court of Appeals decided Nov. 28 to temporarily suspend the ruling, which had jeopardized over $3 billion in bond payments due in mid-December. The Second Circuit has set a Feb. 27 hearing date to consider Argentina’s request for a rehearing.
On Friday, Argentina also asked for the case to be sent to New York state court rather than to continue to move through federal courts, a move that could push back a potential Supreme Court showdown.
Joining the case to argue for the Second Circuit to overturn the ruling are bondholders who accepted the swaps led by Gramercy Funds Management LLC, a creditor with more than $1 billion of the restructured bonds, and Fintech Advisory Inc. Argentine investment-fund manager Puente has also been admitted as a party to the case.
—Chad Bray contributed to this article.
