Argentina lost its bid for a rehearing of a federal appeals court ruling against it in litigation over $1.5 billion in the nation’s defaulted bonds.
The U.S Court of Appeals for the Second Circuit in Manhattan yesterday rejected Argentina’s request that a larger panel of circuit judges reconsider a decision that a three-judge panel reached in August.
The three judges upheld a lower-court injunction barring Argentina from paying holders of its restructured debt if it fails to pay a group of investors that hold defaulted bonds, led by Elliott Management Corp.’s NML Capital and Aurelius Capital Management LP.
The ruling leaves a possible appeal to the U.S. Supreme Court as Argentina’s last chance at reversing a decision it said threatens the country with a new default. The appeals court delayed enforcement of the August ruling, allowing Argentina to continue paying holders of its restructured debt while it seeks Supreme Court review.
Argentina in 2001 defaulted on a record $95 billion of foreign debt. Holders of more than 90 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount.
The court yesterday also denied requests by groups holding restructured bonds to reconsider the case.
A lawyer for Argentina told the three-judge panel in February that the country “won’t voluntarily comply” with a ruling forcing it to pay in full the holders of defaulted bonds.
Yesterday’s decision “further demonstrates that Argentina’s arguments that it cannot keep its promises to U.S. investors and obey lawful orders of U.S. courts are based on nothing more than unfounded speculation and hyperbole,” Theodore Olson, a lawyer for NML, said in a statement. The ruling “only reinforces that Argentina’s self-serving pleas do not warrant the Supreme Court’s attention.”
The lower court case is NML Capital Ltd. v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan). The appeal is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (New York).