Hedge Funds Seek Time So Argentina Bonds Deal Won't Blow Up

  • Singer's Elliott Management says `Give peace a chance'
  • Settling bondholders fear appeals may scuttle historic accord

Paul Singer’s Elliott Management says if a U.S. judge moves too quickly he risks blowing up a multibillion-dollar settlement that promises an end to 15 years of bitter court battles over Argentina’s defaulted bonds.

U.S. District Judge Thomas Griesa is weighing an Argentine request to lift injunctions that would let the country return to international credit markets for the first time since a 2001 sovereign debt default.

Elliott and three other hedge funds, which on Monday agreed to settle their claims for $4.65 billion, asked Griesa to delay his ruling for 30 days so other bond holders could try to negotiate settlements. The hedge funds are worried that a small number of holdouts could delay or even scuttle the historic agreement with court appeals.

"Give peace a chance," Ted Olson, a lawyer for Elliott, told Griesa at a hearing in Manhattan Tuesday.

Argentina, supported by a group of hedge funds that settled before Elliott, asked Griesa to get rid of the injunctions as soon as possible, so the country can issue bonds to pay the settlements. 

“It’s the injunction itself, not Argentina, that stands in the way of resolving this dispute," said former U.S. Attorney General Michael Mukasey, who represents EM Ltd. Kenneth Dart’s EM Ltd. and Montreux Partners settled for more than $1 billion last month. The settlement set the stage for a ruling in which Griesa said the injunctions are no longer needed, putting pressure on Elliott and the other bondholders to settle.

Argentina has settled about 85 percent of the claims with bondholders whose cases are covered by the injunctions. Several lawyers representing investors in the remaining 15 percent complained that their attempts to negotiate with Argentina have been rebuffed. They supported Elliott’s call for more time.

The case is NML Capital v. Republic of Argentina, 08-cv-06978, U.S. District Court, Southern District of New York (Manhattan).

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