Bloomberg News

Argentina Bond Judge to Rule Before $3 Billion Payout

November 09, 2012

Argentina will learn how much a U.S. judge expects it to pay holders of its defaulted bonds by Dec. 1, the day before the republic is scheduled to begin more than $3 billion in payments to holders of its restructured bonds.

U.S. District Judge Thomas Griesa also said today at a hearing that he will stay a court order forcing Argentina to pay holders of defaulted bonds until he rules on the amount to be paid. Under an appeals court ruling, if Argentina pays the holders of the restructured debt, it must also pay holders of defaulted debt. The judge didn’t say whether he will hold the order in abeyance after he makes his decision on amounts.

Elliott Management Corp.’s NML Capital Fund and other investors are trying to collect on $1.3 billion in the defaulted bonds. The first of three payments that month on more than $3 billion in restructured bonds is planned for Dec. 2.

“Some money” from the December payments is due to the plaintiffs, Griesa said. “How much is the question.”

A federal appeals court in New York ruled Oct. 26 that Argentina can’t make payments on its restructured sovereign debt while refusing to pay holders of the defaulted bonds. The appeals court sent the case back to Griesa to clarify how a payment formula is intended to work and to determine how the court’s orders apply to intermediary banks and other third parties.

Press Statements

On Nov. 6, lawyers for NML Capital asked Griesa for an expedited decision on those questions, citing press statements by Argentine President Cristina Fernandez de Kirchner and members of her cabinet that, according to NML, show the country is trying to evade the appeals court ruling.

Griesa said Argentina has a “duty to comply” with U.S. court orders in bond cases.

“Our courts are not helpless,” he said.

The president and her economics minister “are not thumbing their nose” at court orders, the republic’s lawyer, Carmine Boccuzzi, told the judge.

Briefs from both sides are due Nov. 16.

The case is NML Capital Ltd. v. Republic of Argentina, 08- CV-6978, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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