A group of Argentina exchange bondholders are seeking a rehearing by a U.S. appeals court of an order forcing the country to pay in full holders of $1.5 billion in its defaulted debt when it makes payments to them.
The bondholders allege that the decision conflicts with other court rulings and will likely trigger default on $65 billion worth of exchange bonds held by innocent third parties.
The appeals court last month, referring to Argentina as “a uniquely recalcitrant debtor,” rejected the country’s arguments that ruling for debt-holders led by billionaire hedge fund manager Paul Singer’s Elliott Management Corp. and Aurelius Capital Management LP would violate its sovereignty and expose it to a fresh financial crisis by threatening a default of the new bonds.
Courts are required to consider the possible effects of an injunction on the rights of third parties, the bondholders said in today’s filing in the U.S. Court of Appeals in New York.
“The property rights of the innocent third party exchange bondholder group are being held as a hostage to pressure the republic to pay” defaulted debt holders, Sean O’Shea, an attorney for the exchange bondholder group, said in the filing.
The case is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (New York).
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