By Nate Raymond and Hilary Burke
Nov 13 Argentina filed a petition for a
rehearing with a U.S. appeals court on Tuesday over a debt
ruling that would force the country to pay holdout creditors
owning bonds in default since 2002.
The court filing said Argentina is seeking a rehearing with
the three-judge panel that ruled in favor of the holdouts last
month, as well as with the entire U.S. Court of Appeals for the
Argentina in its brief said the earlier appellate ruling
last month interpreted a "boilerplate" provision underlying
trillions of dollars in debt in a way that was "inconsistent
with market understanding."
If left in place, the 2nd Circuit's initial ruling "will
exacerbate future sovereign debt crises by making voluntary debt
restructuring essentially impossible," Argentina argued in the
The petition marked the latest development in an escalating
standoff between Argentina and bondholders including Elliott
Management Corp affiliate NML Capital Ltd and the Aurelius
Capital Management funds.
These creditors refused to participate in restructurings of
Argentina's debt in 2005 and 2010. They are suing to recoup $1.4
billion of defaulted debt.
After years of litigation seeking payment on the bonds, the
holdouts scored a major victory when the 2nd Circuit ruled that
Argentina had improperly discriminated against them by paying
bondholders who entered the 2005 and 2010 debt swaps sooner.
The ruling caused Argentina's bond prices to tumble and
prompted Standard & Poor's to downgrade its sovereign debt
The 2nd Circuit has sent the case back to U.S. District
Court Judge Thomas Griesa in Manhattan to resolve questions
about how Argentina would go about paying the holdouts.
At a hearing Friday, Griesa said he intended to rule before
Dec. 2, when Argentina is scheduled to make the first of three
interest payments on the exchange bonds, which will total more
than $3 billion over the course of the month.
The ruling has raised concerns not only for Argentina but
also holders of over 91 percent of Argentina's defaulted debt
who participated in the earlier restructurings.
Sean O'Shea, lawyer for exchange bond holder Gramercy Funds
Management, said at Friday's court hearing that his client was
"being held hostage."
Gramercy has now also retained prominent New York litigator
David Boies and his law firm Boies, Schiller & Flexner LLP to
represent it, law firm spokeswoman Dawn Schneider said in a
Boies gained national attention for representing former Vice
President Al Gore during the Gore v. Bush case before the U.S.
Supreme Court in 2000.
Peter Truell, a spokesman for Elliott, declined to comment
on Argentina's rehearing petition. Melissa McNamara, a
spokeswoman for Aurelius, declined comment.
The case is NML Capital Ltd et al v. Argentina, 2nd U.S.
Circuit Court of Appeals, No. 12-105.