A lawyer for holders of defaulted Argentine bonds told a judge that a leaked legal memo may be “the smoking gun” showing the South American nation plans to defy U.S. courts and default again if the Supreme Court doesn’t review its case.
Robert Cohen, a lawyer for Elliott Management Corp.’s NML Capital, yesterday asked U.S. District Judge Thomas Griesa to find that Argentina violated orders that it not seek to evade U.S. court jurisdiction, and to demand the country inform the court within 72 hours what it plans to do if the Supreme Court won’t hear the case.
“We need to know what those plans are in order to be able to take steps to stop them by June 30, which is the next interest payment on the exchange bonds,” Cohen told Griesa in yesterday’s hearing in Manhattan.
Argentina is seeking to overturn Griesa’s orders that it pay holders of its defaulted debt when it makes payments to investors who agreed to a debt restructuring in which they took exchange bonds at a discount of as much as 75 percent.
A decision by the Supreme Court not to hear the appeal would leave Griesa’s orders in place. The high court could act as soon as June 16.
‘No Secret Plan’
“There’s nothing surreptitious going on. There is no secret plan to evade.” Carmine Boccuzzi, a lawyer for Argentina, told Griesa.
“We simply cannot pay everyone across the board, and we point out that the result of that is a very likely imminent default” if the Supreme Court doesn’t agree to review the case. Griesa said he couldn’t rule on NML’s request yesterday.
NML’s complaint to Griesa was based on a memo dated May 2 to Argentina’s Economy Ministry containing legal advice from Boccuzzi’s firm, New York-based Cleary Gottlieb Steen & Hamilton LLP. A copy of the memo was posted on the Argentine website Seprin.info.
Boccuzzi told Griesa the document was put on the site by an “unauthorized” person. He said the document is protected by attorney-client privilege, declining to discuss its content. Cohen argued the memo isn’t privileged because it has been widely disseminated.
He also said it isn’t protected because Argentina is using the legal advice it in pursuit of a fraud on the court.
According to the memo, written in Spanish, Argentina wants to continue paying its restructured debt, but the courts have put it in a “terrible” position where, absent Supreme Court review, it appears the country will be forced to default.
Forced Default
“We believe that, barring revision by the Supreme Court of the lower-court’s ruling, the best option for the Republic is to permit the Supreme Court to force a default and then immediately restructure all of their external bonds such that their payment mechanism and other related aspects stay outside the reach of the American courts,” Boccuzzi and two others wrote in the memo.
Argentina defaulted on a record $95 billion in foreign debt in 2001. Holders of more than 90 percent of the defaulted bonds agreed to debt restructurings in 2005 and 2010. Many of the holdouts, including NML, sued for full repayment.
Argentina has consistently refused to pay on the defaulted bonds. Griesa, who oversees suits against Argentina by holders of its defaulted bonds, has criticized the country for rebuffing court orders that it pay.
The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).
bloomberg.com
Robert Cohen, a lawyer for Elliott Management Corp.’s NML Capital, yesterday asked U.S. District Judge Thomas Griesa to find that Argentina violated orders that it not seek to evade U.S. court jurisdiction, and to demand the country inform the court within 72 hours what it plans to do if the Supreme Court won’t hear the case.
“We need to know what those plans are in order to be able to take steps to stop them by June 30, which is the next interest payment on the exchange bonds,” Cohen told Griesa in yesterday’s hearing in Manhattan.
Argentina is seeking to overturn Griesa’s orders that it pay holders of its defaulted debt when it makes payments to investors who agreed to a debt restructuring in which they took exchange bonds at a discount of as much as 75 percent.
A decision by the Supreme Court not to hear the appeal would leave Griesa’s orders in place. The high court could act as soon as June 16.
‘No Secret Plan’
“There’s nothing surreptitious going on. There is no secret plan to evade.” Carmine Boccuzzi, a lawyer for Argentina, told Griesa.
“We simply cannot pay everyone across the board, and we point out that the result of that is a very likely imminent default” if the Supreme Court doesn’t agree to review the case. Griesa said he couldn’t rule on NML’s request yesterday.
NML’s complaint to Griesa was based on a memo dated May 2 to Argentina’s Economy Ministry containing legal advice from Boccuzzi’s firm, New York-based Cleary Gottlieb Steen & Hamilton LLP. A copy of the memo was posted on the Argentine website Seprin.info.
Boccuzzi told Griesa the document was put on the site by an “unauthorized” person. He said the document is protected by attorney-client privilege, declining to discuss its content. Cohen argued the memo isn’t privileged because it has been widely disseminated.
He also said it isn’t protected because Argentina is using the legal advice it in pursuit of a fraud on the court.
According to the memo, written in Spanish, Argentina wants to continue paying its restructured debt, but the courts have put it in a “terrible” position where, absent Supreme Court review, it appears the country will be forced to default.
Forced Default
“We believe that, barring revision by the Supreme Court of the lower-court’s ruling, the best option for the Republic is to permit the Supreme Court to force a default and then immediately restructure all of their external bonds such that their payment mechanism and other related aspects stay outside the reach of the American courts,” Boccuzzi and two others wrote in the memo.
Argentina defaulted on a record $95 billion in foreign debt in 2001. Holders of more than 90 percent of the defaulted bonds agreed to debt restructurings in 2005 and 2010. Many of the holdouts, including NML, sued for full repayment.
Argentina has consistently refused to pay on the defaulted bonds. Griesa, who oversees suits against Argentina by holders of its defaulted bonds, has criticized the country for rebuffing court orders that it pay.
The case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).
bloomberg.com
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