NEW YORK May 30 Argentina's lawyers sought Friday to assure a U.S. judge it would not evade orders to pay $1.33 billion to bondholders who refused to accept its debt-restructuring offers if the U.S. Supreme Court declines the case.
U.S. District Judge Thomas Griesa in New York questioned lawyers for Argentina about a leaked memo described as advising on a plan for how to restructure its bonds outside the reach of U.S. courts if the Supreme Court does not take the case.
Carmine Boccuzzi, a lawyer for Argentina at Cleary Gottlieb Steen & Hamilton, acknowledged the memo was real. He said while it did address whether Argentina may need to restructure in a way consistant with U.S. court orders, that was "not the upshort of the memo."
"There is no secret plan to evade," he said.
Boccuzzi added there "likely would be a default" if the lower court rulings remained in place, saying "there would be a cataclysmic result from an affirmance of the order."
The U.S. Supreme Court is scheduled on June 12 to consider whether to hear Argentina's appeal of rulings requiring it to pay the holdout bondholders back in full.
The holdouts' case is the last hurdle to the country putting its 2002 default on $100 billion in debt behind it and regaining full access to international credit markets.
Argentina on Thursday clinched a landmark deal with the Paris Club of wealthy creditor nations to repay its overdue debt worth nearly $10 billion.
After the default, creditors holding about 93 percent of Argentina's bonds agreed to participate in the swaps, in 2005 and 2010, accepting between 25 cents and 29 cents on the dollar.
But bondholders including NML Capital Ltd, a unit of billionaire Paul Singer's Elliott Management Corp, and Aurelius Capital Management went to court seeking payment in full.
The hearing Friday stemmed from the publication in an Argentine blog of portions of a May 2 memo by Cleary Gottlieb that advised the country on options if the Supreme Court did not take the case.
The memo posted online said the "best option" for Argentina would be to let the Supreme Court force a default and then restructure its bonds so the payment mechanism was outside U.S. court jurisdiction.
Robert Cohen, a lawyer for NML, argued the memo "requires the immediate attention of the court."
He argued the judge should rule it was not protected by attorney-client privilege, find the county violated the court's orders and force Argentina to disclose its plans.
Boccuzzi, while not confirming many details of the memo, said it also laid out "possible settlement scenarios," adding there was no plan to evade the U.S. courts' jurisdiction.
But Judge Griesa noted another lawyer at Boccuzzi's firm had previously told a U.S. appeals court Argentina "would not voluntarily obey" his injunctions even if upheld.
"All that's ever been done by Argentina is to refuse to pay its just obligations," he said.
The case is NML Capital et al v. Republic of Argentina, U.S. District Court, Southern District of New York, No. 08-6978. (Reporting by Nate Raymond in New York; Editing by Lisa Shumaker)