Elliott Management Corp.’s NML Capital and Aurelius Capital Management LP asked a court to allow enforcement of a ruling that bars Argentina from paying holders of the nation’s restructured debt without also paying in full the owners of $1.5 billion in defaulted bonds.
NML and Aurelius asked the U.S. Court of Appeals in Manhattan today to remove its stay delaying implementation of the ruling while Argentina seeks to appeal to the U.S. Supreme Court. Lifting the stay would threaten payments on the restructured debt. The next scheduled payments are due Dec. 2.
The bondholders cite a plan announced publicly in August by Argentina’s President, Cristina Fernandez de Kirchner, to exchange the restructured bonds, which are governed by New Yorklaw, for debt payable under Argentina law. U.S. District Judge Thomas Griesa in Manhattan said Oct. 3 that the plan is “an apparent attempt to evade” his orders in the case.
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.
Argentina has vowed never to pay the hedge funds and other holders of its defaulted bonds, whom the country’s leaders have called “vultures.” The legislature passed a law in 2005 barring payment of the defaulted bonds.
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).