La Nacion
New judicial battle over the default
Tuesday, July 24, 2012
By Silvia Pisani
The vulture funds ask for equal treatment for those who entered into the two swaps; there is no date for the verdict
Yesterday the government had a new round in the battle waged with the so-called “vulture funds”, who are asking for “equal treatment” as those who accepted the two debt swaps that they rejected. “The Argentines found substantially more difficulties than the ones they expected,” it was said to LA NACION. What happened yesterday at the Court of Appeals in New York was a “technical” hearing in which both parties made their arguments without a verdict being reached. “There is no determined deadline for that, yet,” it was said.
The hearing responded to an appeal by Argentina on a ruling handed down last February by New York Judge Thomas Griesa in favor of the funds EM and NML. In that round, Griesa sided with the bondholders collecting interest “under equal conditions” as those that did accept the two debt swaps that the government offered and that the so-called “vulture funds” rejected.
The issue became pending upon Argentina’s request for an appeal. In the midst of this there were pronouncements both in favor of our country as well as indicators against it. In favor, Minister Hernan Lorenzino celebrated a statement from the government of Barack Obama that “discouraged” the Court of Appeals from following the path indicated by Griesa. Argentina “must normalize” relations with its creditors, but to follow the course indicated by Griesa could mean “tensions” in “our international relations” said, last April, an amicus curiae brief from the Department of Justice.
With that brief as an umbrella, the Argentine legal team appeared at the New York court to argue in favor of reviewing the measure.
Sources familiar with the case told LA NACION that one of the “surprises” of the hearing was the criteria set out by one of the members of the court in the direction of backing Griesa. “There was no verdict yet, but the impression is that it’s costing the Department of Justice a bit to make its political criteria understood,” was the argument.
Consulted by LA NACION, none of the parties involved made formal comments about what happened.
The bondholders demand that they be paid interest, despite that they did not accept the debt swaps, and without that being an obstacle to their other court cases against Argentina.
The Argentine team argued that to give in to the demand from the funds EM and NML it would be no less than “dynamiting” international agreements on debt renegotiation. “To accede to something like that would be immensely complicated for other debt renegotiation operations that are in course and that depend a great deal on them, like is the case with Spain or Greece,” the ambassador in Washington, Jorge Arguello, gave as examples.
For the plaintiffs, that is to use “the strategy of fear”. The onslaught continues with the aggravating circumstance for Argentina that, days ago, the bondholders won a ruling in their favor in that they can attach state assets in the hands of Banco Hipotecario totaling US$23 million. “What happened yesterday in the New York courts shows that Argentina still has a long way to go to be a trustworthy country for the financial markets. It would be better if it sat down once and for all to negotiate in good faith,” said Mark Botsford, one of the main individual debt holders who, as such, was not part of the process yesterday.
El Cronista
Debt: seeking to reverse judgment in U.S.
Tuesday, July 24, 2012
There was a hearing yesterday in the US Court of Appeals for the Second Circuit in Manhattan between lawyers for the Argentine government and the representatives of the vulture funds. The firm defending Argentina (Cleary, Gottlieb, Steen & Hamilton) – through their attorney Jonathan Blackman- tried to refute over the course of four hours the request for “pari passu” made by NML (property of Elliott) for which a demand is made that the holders of bonds in default have the same treatment as those who entered the debt swap. That is to say, that they also be paid coupons and interest periodically.
The creditors already have a sentence in their favor by the lower court judge, Thomas Griesa, but Argentina’s yesterday was based on the risks that would come if pari passu was backed, since it would generate few incentives for creditors to enter future sovereign or corporate debt restructurings in any country. It’s for that reason that, in addition to the attorneys for Argentina and those for the creditors, representatives of the government of the United States also appeared, supporting Argentina’s position. Not because they are “sympathetic” to the country’s strategy, but because it could affect later debt restructurings.
Argentina’s lawyers argued that the debt swap (started in 2005 and with various re-openings) finally achieved an adhesion of 92% of all the creditors. But to “oblige” the country to also pay the creditors that didn’t accept the proposal could put at risk the honoring of the debt with all the rest.
Once the parties’ arguments were heard, now the Court of Appeals will have to issue a verdict in the coming months.
Clarin
Argentina asks US court to revoke a ruling by Griesa
Tuesday, July 24, 2012
Asks a federal appeals court to revoke rulings by a lower court and impede creditors like Elliott Management to be able to collect US$1.4 billion on bonds in default since 2001.
Argentina asked a federal appeals court to revoke rulings from a lower court and impede creditors like Elliott Management Corp.- NML Capital to be able to collect US$1.4 billion on bonds that fell into default in 2001.
Argentina appealed a ruling handed down by Judge Thomas Griesa of New York in Manhattan that according to the country’s attorneys would allow the creditors who refused to take the swap offers on debt restructuring in 2005 and 2010 to collect, according to international new agencies.
Buenos Aires alleges that the upholding of Griesa’s sentences could undermine debt agreements and set off a new financial crisis in the Republic. Griesa agreed with the interpretation of the NML fund and other investors under the “pari passu” clause.
The investment fund argued that “Argentina, a country with more than US$46 billion in freely available reserves, has the resources to pay those obligations in default in the same way that it pays its other obligations now. It simply refuses to do so, despite years of litigation and the issuing of various rulings against it.”
Argentina argued that “it’s not equal treatment for the holders of bonds in default to be paid complete interest, without a discount and the principal of the debt in default, because the other bondholders that accepted the debt with big discounts through swap offers are receiving a single payment referred to in their payment of restructured interest.”
The application of the pari passu clause allows for only one creditor to obtain collection on the owed amoutn outside the global arrangement that a contry has arrived at after falling into insolvency, without attending to the terms of the agreement. For Griesa, that allows for paying all the creditors equally.
Reuters
Monday, July 23, 2012
By Jonathan Stempel
Argentina's failure to repay bondholders who refused to take part in massive debt restructurings generated strong skepticism on Monday from a U.S. appeals court in New York, which questioned whether it was fair to let the country pay off some creditors but not others.
The outcome of the case, which stems from Argentina's roughly $100 billion default in 2002, could affect how easily countries might fend off angry creditors in bids to extricate themselves from sovereign debt crises.
Bloomberg
Monday, July 23, 2012
By Bob Van Voris and Drew Benson
Argentina asked a federal appeals court to reverse lower-court rulings that could help creditors including Elliott Management Corp.’s NML Capital Fund collect on $1.4 billion in defaulted bonds.
Argentina, which defaulted on $80 billion in foreign debt in 2001, argued today that U.S. District Judge Thomas Griesa in Manhattan was wrong in holding that a provision in the bonds bars the republic from paying bondholders who agreed to debt restructurings in 2005 and 2010 before it pays creditors who refused to take the deals.
El Cronista
The latest flappings of the vulture funds
Tuesday, July 24, 2012
By Jorge Arguello
Days ago, the Members of the U.S. Congress read in the specialized newspapers with the biggest circulation in the country a full page ad from American Task Force Argentina (AFTA) that – centered on me personally – tried to deform, for the umpteenth time, the successful foreign debt renegotiation of our country after the 2001 default.
AFTA is the lobby facade that the vulture funds like NML and EM Ltd. have put up in Washington, and they’ve been shaken with their latest flappings by the proof of the failure of their strategy to exclude themselves from the debt restructurings of 2005 and 2010, chasing millions made from pennies feeding off the worst of the crisis.
And now they are more nervous than ever because a strong information campaign that was not expected from Argentina among the same U.S. senators and congressman that they were accustomed to distributing their lies to put in evidence not only the spuriousness of their interests, but something worse: that they lie, and they lie fully.
The ad, published in The Hill and Politico, contains the same old litany of distortions about Argentina’s behavior iwth its creditors in that it maliciously involves public comments from the presidents of both countries that are partial, out of context and mixing – like the tango – the Bible and the water heater.*
The strategy to undermine Argentina’s image has origins which condemn it. It’s implemented by ATFA’s mentor, Robert Shapiro, an ex-official of Bill Clinton’s who already has forgotten the allergy of his own ex-president for the vulture funds that approached the Democrats to donate money to them.
If Paul Singer, of the NML Fund, today manages billions of dollars in financial investments it’s because his cunning bested the rest of the speculators and after making fortunes in time he jumped to “derivative” financial products that provoked the great 2008 crisis in the United States. Kenneth Dart (EM Ltd) set his residence in the Cayman Islands to evade some US$200 million in US taxes and became a citizen of Belize, trying to re-enter the United States, this time as the consul of that country and under diplomatic immunity.
The true faces of ATFA settle in tax havens, clearly showing how these “risk investors” laugh in the face of US taxpayers to the point of renouncing their citizenship to obtain fiscal benefits.
In the latest months, the newsletters that the Argentine embassy in Washington began to distribute periodically among the 535 members of the U.S. Congress and the top authorities of the Obama administration, plus the illustrative book “Myths and Realities” about the default of 2001, put together by our government, assured ample access to the truth about the restructuring and the payment of the debt and made the interests in play clear.
On one side are the vulture funds fattened at the expense of grabbing debt bonds for almost nothing from economies in turmoil like ours in that crisis or those going through serious financial economic crises, preferably now in Africa and Latin America.
On the other, Argentina, who restructured 92% of its debt in two stages (2005 and 2010), in a process after which demands persist for US$3.5 billoin – nominal, not real! – and of them only 8% are Americans, a fact that in Washington showed the truly mobile lobby of the vulture funds.
Still, faced with the persistent demands of a few bondholders, Argentina is cooperating judicially, all the while arguing its position in terms of fairness and non-discrimination from the creditors, supported by international law. As such, the vulture funds wouldn’t have any chance if countries agreed on an internationally accepted instrument of resolving sovereign debt.
So far, since 2001, various countries included clauses on class actions and jurisdictions to emit debt. But the vulture funds insist on picking on these legal cracks with less and less luck. Their latest defeat was a short time ago, at the U.S. Supreme Court, which refused to hear an appeal on collecting US$100 million from the Argentine Central Bank deposited in the Federal Reserve of New York.
To confront these vulture funds seems relatively simple: expose the truth about what Argentina did with its economy and its debt during the last decade, even associating the payment of creditors with the notable growth of its GDP. And to expose how these funds made their money and their tricks to repeat their maneuvers with Argentina.
It’s certain, they’re vultures. And one can only expect more and more feasting from them. Being this way, they will only get from Argentina more truth on the table and greater political strength to end once and for all with the flight under which they launched an era of global speculation that continues to pile up its bills and from which the Argentine people took a painful lesson which gives us authority few have.
[*NOTE: the phrase “mixing the Bible and the water heater” is an old Argentine literary expression meant to say something was a mix of the important and the mundane, in orde to be pretentious.]
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