| NEW YORK
NEW YORK Oct 26 Argentina urged a U.S. appeals
court on Friday not to lift a hold on an order requiring it to
pay $1.33 billion to bondholders who are suing for repayment
following the country's historic default in 2002.
In a late-night filing, the South American country asked the
2nd U.S. Circuit Court of Appeals in New York to leave a stay in
place pending a U.S. Supreme Court review of a court ruling in
favour of holdout bondholders.
"Vacating the stay now will expose the Republic and innocent
third parties to a potential court-ordered default on over $24
billion," Argentina's lawyers wrote.
The case flows out of Argentina's $100 billion sovereign
debt default in 2002.
Two restructurings in 2005 and 2010 saw creditors holding
around 93 percent of Argentina's debt agree to swap their bonds
in deals giving them 25 cents to 29 cents on the dollar.
But bondholders who did not participate in the swaps, led by
hedge funds Elliott Management Corp's NML Capital Ltd and
Aurelius Capital Management LP, went to court in New York to
seek full payment.
Argentine President Cristina Fernandez has pledged to keep
paying the restructured debt but has vowed to never to pay more
than other creditors received. That has created investor concern
that the country could enter into a new technical default in
order to avoid paying the holdouts.
The case was filed in New York under the terms of the bond
In 2012, U.S. District Judge Thomas Griesa found that
Argentina violated a clause in the bond documents requiring the
equal treatment of creditors.
The 2nd Circuit largely upheld that decision in October
2012, in a ruling the U.S. Supreme Court this October declined
to review. But the appeals court sent the case back to Griesa to
determine how an injunction he had issued would work.
In November 2012, Griesa ordered Argentina to pay $1.33
billion into a court-controlled escrow account in favor of the
holdout bondholders. The 2nd Circuit affirmed that holding in
In September, Argentina asked for a so-called en banc
rehearing before the full 2nd Circuit, setting the stage for
what is expected to be another appeal to the Supreme Court.
As part of its August decision, the 2nd Circuit stayed its
impact pending review of the Supreme Court, giving Argentina and
nervous investors some relief.
Following the August ruling, Fernandez proposed a voluntary
swap of foreign debt in exchange for bonds governed by local
law. But Griesa on Oct. 3 issued an order declaring the proposal
would violate an injunction he issued previously in the case.
After Griesa's order, NML and Aurelius asked the 2nd Circuit
to lift its stay, saying the "equitable calculus has
But Argentina in its brief on Friday said the holdouts "are
wrong to claim that there is a 'plan to evade,' or that the
Republic has been deficient in responding to disclosure
requirements of the district court concerning any alleged
Argentina's lawyers added that the holdout's efforts were
not only directed at avoiding Supreme Court review but, "to be
blunt, their effort to profit from side bets on market
uncertainty and a risk of default."
Representatives for NML and Aurelius did not immediately
respond to requests for comment after normal business hours.
The case is NML Capital Ltd et al v. Republic of Argentina,
2nd U.S. Circuit Court of Appeals, No. 12-105.