US assistant attorney supports argentinaMonday, April 21, 2014
Holdout sovereignty case heard today
The US Supreme Court will today wade into Argentina’s multi-billion dollar legal fight with bond investors who turned down two debt restructuring offers after the country’s 2002 default.
The case concerns whether the investors can force banks in New York with which Argentina does business to disclose information about the country’s non-US assets as the investors seek repayment.
Yesterday it was divulged that US assistant Attorney General Edwin Kneedler will submit an Amicus Curiae today in favour of Argentina, contrasting the recent comments by Secretary of State John Kerry that seemed more amicable toward the holdouts.
The verdict will give hints of what is to come in a bigger case, in which Argentina is challenging a court judgment ordering it to pay US$1.33 billion to the so-called “holdout” bond investors or face a potential default if it refuses to do so, waits in the wings.
The high court could decide in June whether to take up the bigger case. It would not be argued or decided until the court’s next term beginning in October and ending in June 2015.
Argentina has been battling for a decade with the bondholders led by hedge funds NML Capital Ltd, a unit of billionaire Paul Singer’s Elliott Management Corp, and Aurelius Capital Management. Argentina argues the funds bought most of the debt at a deep discount, betwen 25 and 29 cents on the dollar, after the default and sought to thwart the country’s efforts to restructure.
Today’s case concerns NML’s efforts to track down the country’s assets in the US and elsewhere.
NML says it has won judgments worth about US$1.7 billion but it has had little success in seizing assets, failing to seize a frigate and a private satellite contract.
In the matter before the high court, the question is whether NML could enforce subpoenas against Bank of America Corp and Banco de la Nación Argentina seeking information about Argentina’s non-US assets.
Argentina’s lawyers say that its sovereign immunity, as outlined in a federal law called the Foreign Sovereign Immunities Act, extends to the type of information NML is seeking via the subpoenas. This position is supported by the US government, which has refrained from coming to Argentina’s aid before the Supreme Court in the parallel case over the pari passu clause, whereby all bondholders must be treated equally.
NML and the other holdout investors are arguing that since Argentina services its debt on the restructured bonds, it must also pay a proportion of that money to the holdout bond investors.
—Herald with Reuters