Holdout investors seek documents from Argentina's law firm

NEW YORK Thu Dec 20, 2012 5:59pm EST

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NEW YORK Dec 20 (Reuters) - Investors suing over Argentina's 2002 sovereign debt default are seeking to force the country's law firm to hand over any documents related to its stated plans not to pay them.

The "holdout" creditors on Thursday filed a motion in U.S. District Court in New York to compel Cleary Gottlieb Steen & Hamilton to produce documents in response to a subpoena sent to the firm on Nov. 26.

The creditors said they are seeking information about any plans made by Argentina to avoid court orders requiring it to pay them when it pays investors who exchanged their bonds in a debt restructuring process.

The holdouts, including Elliott Management affiliate NML Capital Ltd and the Aurelius Capital Management funds, are seeking to be repaid in full on their defaulted Argentine bonds after spurning the debt exchanges in 2005 and 2010. Argentina calls the litigating funds "vultures" and has vowed never to pay them.

The litigation has been dragging on for 10 years. While Argentina has won most of the legal battles, the holdouts have scored major court victories in recent months.

Last February, U.S. District Court Judge Thomas Griesa ordered Argentina to pay the holdouts at the same time it paid investors who exchanged their bonds. That order was mostly affirmed by a three-judge panel from the 2nd U.S. Court of Appeals in October. Argentina has since asked the full appeals court to review that decision.

Following adverse rulings, officials in Argentina, including fiery, left-leaning President Cristina Fernandez, have vowed that the government would not pay the holdouts.

The holdouts said in the motion filed on Thursday that its subpoena to Cleary is seeking information about any plans Argentina may have made to defy Griesa's orders.

The holdouts argued that there is no basis for Argentina or Cleary to argue the documents sought are protected by attorney-client privilege or by deliberative process privilege.

If documents are discovered that show Argentina seeking to defy Griesa's orders, they would be in "furtherance of a crime or fraud, and thus would not be entitled to the benefit of a privilege," the investors said in the motion.

A spokesperson for Cleary did not immediately respond to a call for comment. A spokesman for Elliott Management declined to comment when contacted by Reuters.

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