Argentina Seeks to Bar Investors Who Sold Bonds From Class

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Argentina is trying to limit investors who can sue the South American nation in a class action to recover the value of defaulted bonds, saying if they don’t have the bonds anymore, they have to sue on their own.

Argentina defaulted on a record $95 billion of sovereign debt in 2001 and has spent the past 14 years fighting attempts by various parties to recover what they’re owed. On Wednesday, lawyers for the country asked a U.S. appeals court in New York to reverse a judge who expanded the pool of investors who could join a group lawsuit.

U.S. District Judge Thomas Griesa in Manhattan failed to follow instructions from the higher court in his rulings in eight separate cases, the country’s lawyers contend. While bondholders have routinely won judgments against Argentina, the nation has consistently resisted payment, blocking its access to international credit.

Argentina restructured about 92 percent of its debt in 2005 and 2010, offering new bonds at a discount of about 70 percent.

The restructured bondholders haven’t been able to collect since last year, when Griesa blocked payment of the newer bonds. The judge held that the new debt holders can’t be paid until Argentina pays $1.7 billion owed to a group led by hedge funds including Paul Singer’s NML Capital, a unit of Elliott Management, that hold the older bonds.

Elliott declined to comment on the appeal.

Sanctions Request

Separately, NML asked Griesa on Wednesday to sanction Argentina for allegedly disobeying his order to turn over documents and answer questions about assets held outside the country. NML is seeking to seize Argentine assets to pay court judgments it won on defaulted bond claims.

In 2012, creditors won a court order detaining an Argentine Navy training ship, the ARA Libertad, in Ghana. The vessel was allowed to leave after 76 days, following a ruling by the Hamburg-based International Tribunal for the Law of the Sea.

In its sanctions request, NML seeks an order barring Argentina from using defenses, including attorney-client privilege, based on its failure to obey his orders to produce evidence.

The appeals case is Puricelli v. Republic of Argentina, 14-2104, Second U.S. Circuit Court of Appeals (Manhattan). The lower-court case is NML v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).

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