* 2nd Circuit Court of Appeals declines to full-court
* Argentina sought reconsideration of October appellate
* Argentina's economy ministry declines comment through
By Nate Raymond
NEW YORK, March 26 A U.S. appeals court on
Tuesday denied Argentina's request to reconsider a ruling that
favored creditors who opted out of two of the country's debt
The 2nd U.S. Circuit Court of Appeals in New York declined
to grant a so-called en banc rehearing, in which the full court
would have reviewed a decision by a three-judge panel of the
court that went against Argentina in October.
In a brief order, the 2nd Circuit said its 13 active judges
had considered Argentina's petition for a rehearing and denied
it. No reason was given.
The earlier decision required Argentina, which has refused
to repay bondholders who opted out of its restructurings, to
treat all of its bondholders equally.
Tuesday's ruling was a set-back not just for Argentina but
also the U.S. government, which had contended in court papers
the earlier ruling ran "counter to longstanding U.S. efforts to
promote orderly restructuring of sovereign debt."
The decision leaves Argentina with one appeal outstanding
before the 2nd Circuit, after it appealed a trial judge ordering
Argentina to pay into escrow the full $1.33 billion owed to the
A decision in that appeal remains pending. Argentina is
expected to respond by Friday to a request by the court on March
1 for the "precise terms" for any alternative payment formula it
would use to resolve the litigation.
In an analyst note Tuesday, BNP Paribas said Friday's filing
"is to be seen as a window of opportunity for the sovereign to
satisfactorily address the Court's interpretation of its legal
A spokeswoman for Argentina's economy ministry declined to
The case stems from Argentina's $100 billion sovereign debt
default in 2002. Argentina has been fighting demands for payment
from the holdout bondholders, who refused to participate in debt
restructurings in 2005 and 2010.
Around 92 percent of the bonds were restructured, and
holders received 25 cents to 29 cents on the dollar.
Holdouts led by Elliott Management affiliate NML Capital Ltd
and Aurelius Capital Management have sought full payment.
Argentina calls these funds "vultures."
The decision Tuesday marked another setback for Argentina in
its efforts to reverse a February 2012 decision by U.S. District
Judge Thomas Griesa holding it had violated the "pari passu"
clause in its bond documents requiring it to treat creditors
The 2nd Circuit subsequently upheld that finding and sent
the case back to Griesa to determine the how the payment
mechanism would work and how injunctions the judge issued would
apply to third parties and intermediary banks.
The 2nd Circuit heard arguments on February 27 on the appeal
of Griesa's November decision on those issues.
Representatives for NML and Aurelius had no immediate
The case is NML Capital Ltd et al v. Republic of Argentina,
2nd U.S. Circuit Court of Appeals, No. 12-105.