Argentina Asks Judge to Hold Separate Hearings on Debt Suits

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Argentina asked a U.S. judge to separately consider a group of eight class actions filed by holders of the country’s defaulted debt from another set of cases including claims by hedge funds.

Carmine Boccuzzi, a lawyer for Argentina, asked U.S. District Judge Thomas Griesa Tuesday to reject a request by lawyers for the investor classes to consider their cases along with dozens of what are known in the bond dispute as me-too cases. Those include lawsuits by hedge funds that bought the debt at a discount after Argentina’s 2001 default.

Both groups of investors are seeking the benefit of Griesa’s rulings blocking Argentina from paying holders of its restructured debt until it pays $1.7 billion owed to a group led by Paul Singer’s NML Capital.

Boccuzzi argued that Griesa shouldn’t consider whether to extend the rulings to both groups at the same time, because a federal appeals court is considering orders defining who’s included in the investor classes. The two groups of claims are different and should be ruled on separately, he said.

The investors in the class action cases are seeking an order requiring Argentina to make payments into escrow accounts for the benefit of the investors in those cases. The me-too investors want to be included in the group that must be paid before Argentina can return to servicing its restructured debt.

The investors’ request is based on a clause in the bond agreements known as pari passu, which Griesa has ruled requires Argentina to give equal treatment to holders of its defaulted bonds and holders of debt issued in two restructurings, in 2005 and 2010. About 92 percent of Argentina’s creditors agreed to exchange their bonds for ones paying about 30 percent of what they were originally promised.

The rulings triggered a new default in July when Argentina refused to pay the NML group and was blocked from paying restructured debt holders.

The case is Seijas v. Republic of Argentina, U.S. District Court, Southern District of New York (Manhattan).

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