The U.S. has sided with Argentina and asked a federal appeals court to reverse lower-court rulings stemming from bond holders’ attempts to collect on judgments against the republic.
The government yesterday urged the U.S. Circuit Court of Appeals in New York to reverse rulings directing Argentina to make payments to Elliott Management Corp.’s NML Capital Fund before it makes payments to others on bonds the republic issued in its 2005 and 2010 debt restructurings. U.S. District Judge Thomas P. Griesa in December and February issued the rulings that the U.S. now seeks to reverse.
The U.S. government said in a legal brief that Griesa’s interpretation of a contract clause “could enable a single creditor to thwart the implementation of an internationally supported restructuring plan, and thereby undermine the decades of effort the United States has expended to encourage a system of cooperative resolution of sovereign debt crises.”
The litigation stems from efforts by creditors to collect on bonds following Argentina’s 2001 default. Since then, Argentina hasn’t made payments on the bonds and instead restructured approximately 92 percent of its debt in exchanges in 2005 and 2010. Litigating creditors have rejected both offers.
The U.S. says in its friend-of-the-court brief that it doesn’t “condone or excuse” Argentina’s failure to make the payments. Still, the orders issued by Judge Griesa are “impermissibly broad” and harmful to U.S. foreign relations, the brief says.
The case is NML Capital Ltd, Aurelius Capital Mater Ltd, 12-105, U.S. Court of Appeals for the Second Circuit (Manhattan).