Judge Thomas Griesa didn’t give Argentina an inch.In a ruling earlier this week, the New York Judge ordered Argentina to pay out every cent it owes Paul Singer’s hedge fund Elliot Management, and other bond holders suing for $1.3 billion dollars in sovereign debt.
The suit has been going on for around a decade. The plaintiffs bought Argentine debt in 2001 and refused to restructure in 2005 and 2010. Argentina has maintained that it needn’t pay these holdouts, and has been favouring bond holders that restructured instead.
But the holdouts have dauntlessly pursued their money in Court, and on the high seas — like when Singer had Argentine naval vessel, the ARA Libertad, impounded in Ghana.
Now, according to Griesa, the country has until December 15th to pay up. And that, he says, is his final word.
From Griesa’s decision (via Shearman Sterling):
The amount that is currently due is the amount of the unpaid principal, the due date of which has been accelerated, and accrued interest. The total of these amounts due to plaintiffs is approximately $1.33 billion. Thus, as some time in December 2012, when Argentina makes the interest payments on the Exchange Bonds, amounting to a total of about $3.14 billion, Argentina will be required to pay plaintiffs approximately $1.33 billion. . . In order to comply with the terms of the Injunctions, Argentina must pay plaintiffs 100% of that $1.33 billion concurrently with or in advance of the payments on the Exchange Bonds. . .These provisions [of the Injunctions] properly start with the fact that if 100% of what is currently due to the exchange bondholders is paid, then 100% of what is currently due to plaintiffs must also be paid. . . But the fact is that the amount owed to plaintiffs by Argentina is the accelerated principal plus accrued interest. Argentina owes this and owes it now.
Judge Griese also ruled that the Bank of New York, Argentina’s trustee, is also subject to the terms of his order, which is his way of saying: ‘don’t even try any banking funny stuff, Argentina.’
The court believes that the Order regarding Ratable Payments should be put into effect at the earliest possible time. The less time Argentina is given to devise means for evasion, the more assurance there is against such evasion. . . This means that the [Injunctions] will be applicable to the interest payments made to exchange bondholders in December 2012. In order to avoid confusion and to give some reasonable time to arrange mechanics, the court specifies that the precise interest payment involved will be that of December 15, 2012. . . Since the Court of Appeals has not finally spoken on the subject of the calculation of the payment to plaintiffs, such payment is to be made into an escrow account, so that any adjustments required by the final Court of Appeals’ ruling can be made.
And all this needs to start happening yesterday.
The Judge lifted the stay on an injunction forcing Argentina to pay while it also proceeded with an Appeals Court process. His reason for lifting it was Argentina’s fiery rhetoric about refusing to pay bond holders.
Not that they’ve changed their tune.
Here’s what Finance Minister Hernan Lorenzino had to say about the latest decision (via MercoPress):
“Judge Griesa doesn’t have the power to define this current situation… Who is going to accept a debt restructuring, with significant cuts and 30 years long term if with time, patience, good lawyers and a permeable judge they can collect the full face value of the bonds?”, asked Lorenzini.
“We are going to maintain Argentina’s position in every available way, as we have been doing so far,” Lorenzino said, as he reminded that the government will face “every decision that is against Argentina’s interests before the US Supreme Court and international tribunals” and insisted will pay restructured bond holders on 2 December as originally programmed.
The country will request a review of the Judge’s decision on Monday. But as Business Insider has said before, the likelihood that the country will be allowed to continue with its appeals process is very low.
Your move, Argentina.
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