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October 23, 2014
Monday, July 21, 2014

New meeting with Griesa to focus on stay

With nine days to go until the deadline to simultaneously pay both parties, the government has its plate full in terms of settling both scenarios.

Gov’t, lawyers seek to resolve issue of frozen restructured repayments

The government’s lawyers will tomorrow sit down with Judge Thomas Griesa and legal representatives of the European and US banks that requested clarification from the New York District Court on whether they can distribute funds to restructured holders of Argentine debt.

The meeting could be pivotal in opening the door to negotiations between the country and vulture funds, whose bonds, according to Griesa, must be fully repaid.

With nine days to go until the deadline, the government has its hands full in terms of settling both fronts — vultures and restructured bondholders. The US$539 million it deposited in a Bank of New York Mellon (BoNY) account in Buenos Aires to pay restructured creditors has been frozen because banks remain unclear on the legality of distributing the cash.

The Cristina Fernández de Kirchner administration maintains it has fulfilled its responsibility by making the deposit, and that declaring default is something it has to do willingly.

Looking for a stay

The meeting had been called after a clarification request from bondholders and holdout creditors, including the Bank of New York Mellon (BoNY), on what it should do with the funds transferred by the Argentine government.

Earlier this month, the JP Morgan Bank also requested a written explanation following the “unusual” ruling by Griesa which prevents bondholders from receiving the funds.

In addition, the lead holdout, NML Capital Ltd, a subsidiary of Elliott Capital Management, has filed a motion, as have bondholders with euro-denominated Argentine debt, payment systems Euroclear Bank, Clearstream Banking and JPMorgan Chase & Co.

“The Argentine government appears determined to default. We hope it chooses to avoid this dead-end path,” a spokesman for NML said on Friday.

But Cabinet Chief Jorge Capitanich said the government is paying its obligations and will not default.

“There is no chance for us to default,” Capitanich expressed last week.

As the Herald reported, a stay would temporarily lift Griesa’s own ruling obliging Argentina to pay the NML and Aurelius funds the face value of defaulted bonds and would allow for breathing room for negotiations and for the payment of the country’s restructured bondholders.

The conclave will take place at the District Court of New York at 10.30am (11.30am local time).

Herald staff

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