(Adds dropped word in paragraph 8)
By Davide Scigliuzzo
NEW YORK, Aug 6 (IFR) - The possibility of a wave of
"me-too" claims against Argentina is threatening to scupper any
of the relief the sovereign might eventually gain from ongoing
talks between international banks and litigant investors.
A group of so-called "me-too" holdout investors have already
asked a US judge to grant them equal treatment amid hopes of a
potential deal to allow international banks to buy defaulted
debt from hedge funds led by Elliot Capital Management and
Holdout bondholders represented by law firm Proskauer on
Wednesday asked US district court judge Thomas Griesa that their
clients be granted formal pari passu protection, according to a
letter seen by IFR. Those international and Argentine investors
have potential claims in excess of US$750m, including interest.
"Not only did the (Argentine) Republic make a mockery of the
court-ordered settlement talks, but it now appears to be
brokering a back door settlement only with bondholders that have
formal pari passu injunctions," Jennifer R. Scullion, a partner
at the firm, wrote to Griesa.
Claims from me-too holdouts - bondholders who did not accept
the terms of the 2005 and 2010 restructuring but are not covered
by the injunction that effectively put Argentina in default on
July 30 - could represent a major setback in Argentina's efforts
to put its debt woes behind it.
Even if a deal with the main litigants is reached in the
near future, this would not prevent me-too claimants from
obtaining new injunctions prohibiting Argentina from making
payments on its restructured bonds.
"Griesa could grant a stay for the (main) plaintiffs, but
conceivably grant a new injunction to others," said a lawyer
familiar with the case.
Negotiations to make Elliot and other litigant investors
whole may prove fruitful and encourage Judge Griesa to unblock
payments to holders of restructured debt, but filings from other
holdouts could put Argentina back to square one.
"The so-called 'me toos' could quickly make similar demands
and thus make the problem come back," wrote Jan Dehn, head of
research at Ashmore Investment Management.
"The combined claims of the plaintiff plus the 'me toos' is
about US$15bn, which is more than half of Argentina's FX
Judge Griesa had refrained from granting similar me-too
injunctions prior to Argentina's default, but Proskauer is
hoping that recent developments in the case will make the judge
reach a different conclusion.
(Reporting by Davide Scigliuzzo; Editing by Paul Kilby and Marc