* Holdout bondholders asked to respond by April 22
* Argentina would pay just one-sixth owed to holdouts
By Nate Raymond
NEW YORK, April 2 A U.S. appeals court on
Tuesday gave holders of defaulted Argentina debt three weeks to
respond to the country's proposed plan to pay them much less
than the $1.33 billion they have sued to collect.
The 2nd U.S. Circuit Court of Appeals in New York directed
bondholders who did not participate in Argentina's two debt
restructurings following its 2002 default to submit a response
by April 22.
They are led by NML Capital Ltd, a unit of billionaire hedge
fund manager Paul Singer's Elliott Management Corp, and Aurelius
Capital Management. Representatives for the funds declined to
Tuesday's brief order likely delays any definitive ruling
from the appeals court until at least late April.
On Friday, Argentina submitted a payment proposal offering
NML Capital and the others, which the country calls "vultures,"
just one-sixth of the money they say they are owed.
An Argentina analyst with Medley Global Advisors, Ignacio
Labaqui, said the court "wants to be sure about the plaintiffs'
stance regarding Argentina's payment proposal.
"I would not say this is a good or bad sign for either
side," Labaqui said. "The court is gathering information and may
be exploring the possibility of a negotiation between Argentina
and the holdouts."
The litigation arises from the country's $100 billion
sovereign debt default in 2002. Uncertainty over the case has
already rattled Argentine credit markets and created fears of a
A legal advisor for exchange bondholders and non-litigant
holdouts, Eugenio Bruno of the Garrido law firm, said he expects
"a close rejection from the plaintiffs" and "would not rule out
that some of them could be opened to participate, down the road,
in the exchange if it happens."
About 92 percent of Argentina's bonds were restructured in
2005 and 2010, with holders receiving 25 cents to 29 cents on
But the holdouts demanded full payment, and won a victory in
October when the 2nd Circuit said Argentina violated a clause in
bond documents that required equal treatment of creditors.
Then in November, U.S. District Judge Thomas Griesa ordered
Argentina to pay the $1.33 billion into an escrow account before
making its next interest payment to creditors who participated
in the restructurings.
The 2nd Circuit heard Argentina's latest appeal on Feb. 27.
Argentina's latest payout plan followed terms accepted by
bondholders who swapped their debt in the 2010 restructuring.
Argentina said its plan has an estimated value for NML of
$120.6 million, one-sixth of the $720 million it would receive
under Griesa's order. Argentina has estimated that NML paid just
$48.7 million for its bonds in 2008.
The case is NML Capital Ltd et al v. Republic of Argentina,
2nd U.S. Circuit Court of Appeals, No. 12-105.