Argentina in last minute effort argues possible ‘technical default’ before Judge Griesa
Argentina asked a US judge late Friday night to maintain his order blocking payment on defaulted sovereign bonds to holdout investors until lingering questions are settled in a higher court's appeals process.
Less than 15 minutes before a midnight deadline, Argentina's lawyers filed their brief outlining why US District Judge Thomas Griesa should reject the argument by holdout creditors to pay them in full on debt that has been in default since 2002.
The arguments came three days after Argentina asked the US 2nd Circuit Court of Appeals in New York to reconsider its October 26 ruling that favoured these holdout bondholders and rattled financial markets in the process.
That decision upheld the ruling made by Griesa that found Argentina discriminated against bondholders such as Elliott Management Corp's NML Capital Ltd and Aurelius Capital Management. They refused to take part in two debt restructurings as Argentina tried to recover from a 95bn dollars default a decade ago.
Griesa had put his own ruling on hold pending the appeal and Argentina on Friday argued he should keep the freeze in place until outstanding issues were settled.
“The Court should not accept the false urgency plaintiffs are trying to create and allow the Republic and all potentially affected third parties to prosecute their appeal rights before any orders go into effect,” Argentina said in its brief.
“Plaintiffs’ unprecedented demand for over one billion dollars from the fiscal reserves of a foreign state, with further demands to follow as more ‘me too’ plaintiffs pile in, had the immediate, intended effect on the market of sending it into disarray,” Argentina said in its brief. “Faced with losses already, third-party bondholders have asked the court to protect their interests.”
After the 2nd Circuit's ruling, Argentine officials were widely cited in the media saying they would flout the court and continue to pay investors who participated in the debt swaps but would never pay the holdout investors.
That prompted Griesa to demand a direct government pledge to comply with his orders.
National Director of Argentina's National Bureau of Public Credit, Francisco Eggers, submitted a signed affidavit saying the government would abide by the court's rulings and not seek to evade its directives.
“As directed by the court, on behalf of the Republic, I confirm that the Republic has complied, and will comply with the terms...,” Eggers said.
Last month's ruling led to fears US courts could ultimately inhibit debt payments to creditors who accepted the terms of the restructuring, out of consideration for investors who rejected Argentina's terms at the time.
This would trigger a technical default on approximately 24 billion dollars worth of debt issued in the 2005 and 2010 exchanges.
“It is far beyond the bounds of equity to seek to enforce the rights of one litigant by jeopardizing the rights of others,” lawyers representing a group of bondholders who participated in the exchange, led by Gramercy Funds Management LLC., said today.
The briefs from Argentina and the exchange bondholders addressed two questions that the appeals court had referred back to Griesa for answers.
These were technical questions of how debt payments would be calculated and how to treat the involvement of third-party banks such as Bank of New York Mellon, which act as transfer agents for money owed to exchange bondholders.
Argentine President Cristina Fernandez said immediately following the October decision her country would not pay “one dollar to the vulture funds”, the term used for holdout investors who buy distressed or defaulted debt and then sue in international courts to get paid in full.
In a brief filed late Friday the Bank of New York Mellon, which transfers funds from the Argentine government to the country's bond holders, argued to Judge Griesa that it is not an agent of the Argentine government and maintains an “arm's length” relationship.
The bank said its “duty of loyalty runs to the Exchange holders”, that is, to enforce the rights of investors who exchanged their bonds in 2005 and 2010. “Punishing an innocent third party to try to obtain compliance from an enjoined party goes beyond any legitimate purpose for contempt,” BNY Mellon said.
The bank said it could be put between a rock and a hard place if Griesa rules they are to make payments to all parties but are prohibited because Argentina does not transfer any money through it.
“BNY Mellon will face a potential conflict between its obligations to Exchange Holders under the Indenture and its obligations to the Court,” the bank argued. In that case, the bank said, it needs guidance from Griesa on what its duties and responsibilities would be.
Ultimately, the bank wants Griesa's order to remain in place, leaving the payments frozen until the 2nd Circuit reviews and rules on his logic.
The judge is expected to make a speedy response as Argentina is due to start making 3.3 billion dollars worth of payments to exchange bondholders starting December 2. Griesa's ruling will automatically return to the appeals court for review.
In a court filing this week, NML and Aurelius urged Griesa to lift his February 23 stay on payments pending appeal.
October's ruling by the appeals court largely upheld injunctions issued in February by Griesa in favour of the holdouts, which own roughly 1.4bn of defaulted debt. The holdouts said in their argument to Griesa that terms of the swapped Argentine bonds may allow the country to circumvent the United States by using subsidiaries in London and Luxembourg to make debt payments.
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Default part 2 coming up...
It looks like only Venezuala will be lending to Argentina in future no matter what the outcome. After all, if you have to chase Sovereign debt through the (many) courts...
!Crustina for president! yay...
there will be no need for another UK conflict while argentina is doing such a good job on itself, long term damage incoming!!!!
Interesting how CFKC arrogantly tells Argentines that they can pay but won't pay, whilst they plead poverty in the courts.
As Raven suggests, this is Default Part 2. They failed to pay the first bonds, entered into a restructuring and now they are attempting to default on these bonds.
In finance, there is such a thing as Hire Purchase. This means that the object you are buying is not yours, it belongs to the finance company until you make the final payment. In Britain, people would call this the “Buying on the Never, Never”, because the payments were so high (to take account of the risk) that most people never completed the final payment. So the goods would never belong to the hirer.
What Argentina has done is redefine “the Never, Never” to mean that they will always find an excuse to 'never, never' pay their bonds. In other words, if you lent them money, more fool you as you'll never see this money returned.
What it means for the rest of the world though, is that they cannot trust Argentina to pay debts, so they have to deny Argentina access to the financial system.
What this means for Argentina (in the long run) is that they would not be able to export or import goods that they need - except through third parties like Mercosur (by paying a hefty premium for this) and by being forced to pay up front - so that the Mercosur neighbour doesn't get stiffed with the bill.
More importantly, it means that they will find it increasingly difficult to buy oil, except from Venezuela. The problem with this though is that the type of crude in Venezuela needs to be mixed with the crudes from the Arabian Gulf and without access to that crude, Argentina will run dry.
So we can expect Argentina to default on the debts, refuse to pay them through Europe and then be denied access to the US financial system, followed by an import/export crisis and even more financial trouble at home. The riots will get louder and louder as more people realise the dictator needs to be hung.
Let's hope that this time, rather than just banging those pots and pans together to make a noise, they use them to bang CFK's head until it's flattened.
you know they don't care about the people of Argentina....
Seems logical to me
Do you think the Argentines are stupid enough to believe her lies..
they have so far..
If only you could choose the name -- Cowboy --instead of this one as a man who never seen USA yet.
Go bother some other board please
Interesting analysis and credible too, because it sounds very Argentine.
“Plaintiffs’ unprecedented demand for over one billion dollars from the fiscal reserves of a foreign state, with further demands to follow as more ‘me too’ plaintiffs pile in, had the immediate, intended effect on the market of sending it into disarray,” Argentina said in its brief. “Faced with losses already, third-party bondholders have asked the court to protect their interests.”
Lawyers' gobbledeegook. I haven't noticed any “false urgency”. The 2nd Circuit Court of Appeals referred the case back to the District Court for clarification. Griesa has already said that argieland's stated reserves are more than adequate. So what's the truth? Argieland doesn't have the reserves it declared? Or it just doesn't want to pay? When did the third-party bondholders ask for protection? They are already out 70%. But the original ruling says that argieland must pay all bondholders equally. So just a case of paying the “hold-outs” in proportion. Does anybody know how many bondholders argieland is paying with the US$3.3 billion?
I think I know the answer to that already
What is kind of hilarious is they say one thing in NY and another in BA like nobody has access to the BA news in NY
There is no dollar clam but it is working fine.
We don't' have the money to pay but we have the most reserves in SA.
hmm
idiots
Interesting line of reasoning.
Other than that, it is yet another battle, in yet another war, on yet another front, that the administration of CFK is slowly but surely losing.
The financial costs alone of fighting these things must be considerable. Never mind the damage to the credibility of, and confidence in, the country.
Soon most of the money being invested in Argentina will be laundered drugs money, as legitimate investment goes elsewhere.
You are not an American ,probábly you know moré than élse,
We don't know,Could you eñumeraté all Argentina foréign débts in maturities and to where. ?
please don't lét us béñighted.
such a slippery customer, cheating, lying, twisting and turning, Argentina's Govt. now has to face up to their responsibilities. A long time coming but justice will be served.
He ís a lucky guy whó has doúble passports.
Your a Troll, full stop!!!
Your attention is very admirable !
Thats true that Tipsy/Light Thinks are mine
at least i confess my names unlike others.
Time zones. Names. Who gives a flying fig?
I can smell real desperation in the recent actions of the Argentine Government. They know everything is about to come tumbling down. Maybe that is why Timerman is out of the country so much.
I do want to discuss somethings with you at “....horce racing book attracts.....”” article....but it is not open. !
Timerman must be out looking for some more property to buy outside Argentina. his little bolt hole in Uruguay might be a bit too close when the house of cards comes crashing down.
CFK really has been throwing up a smokescreen. She says there are plenty of reserves in the bank, yet Venezuela recently paid $3billion to the IMF on Argentinas behalf. Why would Venezuela do that and why would CFK ALLOW them to do that? Fair enough, it could be argued that she likes spending other peoples money, but another country paying for Sovereign Debt that isnt theirs? for a country that claims to have $46billion in reserves?
Now she risks Argentina defaulting again by playing this game in the courts.
Is the real truth that Argentina are close to broke (genuinely) and they really can't afford the repayments? Has she been paying the 7% holdouts and when did that cease? and if so, why? She's had plenty of time since 2010 to bleat about ''vulture funds'', why has she started now?
I will start selling to the politicians first. :) What other people see as difficulty I see as opportunity.
If it was others that owed Argentina money,
These Argies on here would be screaming pay pay pay,
What bloody hypocrites,
You had the money, so stop complaining and pay the bloody debt,
But you cant , she cant, and the truth will come out, argentina is broke, she has given it all away to her bank,
And its people are about to find out the hard way,
Still,
We could be totally wrong, and se will turn up hand over the cash, and make us all look silly.[not]
Obviously a lot of them do, that is why they are out pot banging, whatever. But they do NOTHING to change the situation.
Come the next election for President they will still elect a Peronist with all that it implies for corruption and all the rest.
If anybody doubts me just look on the Clarin ‘comments’ to articles involving the government and / or TMBOA. At least half of them are like the trolls on here: blind abeyance to the status quo. A significant number end their posts with Viva Peron!
How typical of the larger population they are is anybody’s guess
You just could not make this nonsense up.
CFK really has been throwing up a smokescreen. She says there are plenty of reserves in the bank, yet Venezuela recently paid $3billion to the IMF on Argentinas behalf. Why would Venezuela do that and why would CFK ALLOW them to do that?
Probably part of a payment plan for getting into Mercosur
It is CFK and her government that is broke,
So please don’t pass the buck ..
still,
you can always kick her out.
With Venezuela's ppl out of frijoles, aceite, harina de arepa, while Argentines are relatively rich?
The TRIPLING of the price of oil commodities, mathematically, would have raised much more Venezuelans UP. Instead, Venezuela's debt/gdp, thru Chavez spending, is humongoid.
www.huffingtonpost.com/diego-arria/hugo-chavez-venezuela-elections_b_2144864.html
A Bolivar is less valued on the street in 2012 than a nice swath of toilet paper.
Solution: bidets. I love them.
Just because you use more than one username, it doesn't mean the rest of us do! So answer me this, why should i confess to something that is not true, just because you think it is true? Exactly, You can't answer me that can you, because you think that just because you do it, that i and everyone else does too, which is flawed logic, because just because some other users to it, it doesn't mean i do it. Only evidence you have is circumstancial and based mainly on your own opinion that i (Teaboy2) and poster using the username Teaboy are one and the same when we are not. As anyone could have used the name Teaboy and am certainly not the only person in the world that goes by the name Teaboy2 , so a bet whoever it is that used the username Teaboy is not the only person to use that username on the internet either.
@27 - Don't worry Elaine, i reported him for his IP address to be banned just like i did Guzz last week, so don't be surprised to see no more posts from LightThink/TipsyThink or anyother username he uses, one of which is possibly Isooooooldeisskrate (or however its spelt)! lol
What is tiresome is the silly distraction posts. What does it matter what names we use or where we post from? It is easy to spot a person pretending to be something they are not. Or an attention seeker. Or an out and out looney.
I agree that Argentina is very likely to be broke. They cannot declare this - because it would mean the end of the gravy train. Possibly even the end of their lives if they don't make it to the private jet on time!
So they are looking for a reasonable excuse to default on the debts. They've decided to use the hold outs. They use the term 'vultures' to identify them as the enemy to the Argentine people & claim that these funds are seeking to enrich themselves at the expense of ordinary Argentines.
Argentina suggests to the US courts that it would not be equitable to pay these people at the expense of those that did reach agreement to a restructure. They've also suggested (unsuccessfully) that if Argentina was forced to pay, that there would not be enough funds & a default would be the result. The problem is that this claim is not backed up by other statements which maintain that Argentina has $ billions of reserves.
It seems to me that the payments made by Chavez (indicated in @ 37 above) were a favour/bribe to CFK to enable Mercosur membership. Similarly, the suitcases stuffed with dollars were a personal bribe to CFK's family and her cronies.
I have no doubt that CFK's mafia have been bleeding the treasury dry, just as CFK stole the +$650 millions from Sante Fe province and placed it in her private bank accounts in Switzerland. If Argentina ever did have $36 billion in resources, they've long ago made their way to the land of chocolate & cuckoo clocks!
This would explain why the Argentine state is refusing to pay the small amount needed to release their flagship. $10 million is nothing in financial terms, in comparison to the gratitude that the people would have given for the return of their 'heroes' from Ghana.
Only $10 million would have set a precedent. It would have shown that CFK was prepared to deal with the 'vultures' contrary to her claims to the opposite.
Let's face it, Argentina is broke. They have no reserves = NO PAYMENT.
End of the day am not going to just take it, and as Guzz found out when he insulted the memory of those that gave their lives in war and peace this rememberance sunday, i will get them banned. So role on Tuesday as i doubt LightThink or any of his other usernames he uses will be bothering anyone after then.
Personally, I have had all kinds of accusations and insults thrown my way on this board. I take comfort in them being so far off the mark that no one I care about would ever think they were true.
I tend to live by the idea that if I respect a person and they criticise me, I will think carefully about their advice. If I don't respect a person or their opinion I ignore it.
Though in my experience i can not ignore what people say about me, though that stems from a business point of view more than what is said online, unless am directly mentioned by name or actively involved in the dicussion like i am on these boards. Reason being is, if i ignore it and buisness contacts hear it, then it can do untold damage to my reputation or that of my businesses reputation, even the smallest of deterimental comments can cause potential damage, costing hundreds if not thousands of pounds.
The last untrue accusation was by a local girl that claimed i had made her pregnant, and in this town, gossip spreads like wild fire. But shes not the first, i have had a number of people making false accusation or false statements about me or my company, though mainly they have been driven by the thought they could get some money out of me, though instead they get a letter from my solicitor demanding the pay damages and a public apology posted on their facebook pages usually, as thats where all their firends whom thought they were telling the truth will see it and realise they were lying. The other option is for them to be taken to court for libel/slander.
Hell even other companies are just as bad, i have had a few try it on, one even said i was in breach of their trade mark, because my company name was the same as their trading name, yet they weren't even a company or even supplied the same products! So they ended up with egg on their faces when i told them if anyone was in breach of trade mark etc. It is them since they are not a limited company using a trading name that is the same as my limited companies name.
So yes i guess as a result i have grown to be defensive when untrue or false accusationas are made about me or my company etc. But it was out of a matter of necessity, because if i weren't defensive they'd be walking all over me and my company and exploiting the advantage they gained from it to the max.
Now I work freelance I could care less and that is liberating. : )
However I have a feeling that they only did that so that they can continue down their legal avenues (which would have stopped had they not) and that they will still refuse to obey the court if all appeals fail to find in their favour.
Teaboy is a name from Chris..
If you don't believe me ,ask to Captain Yankeeconqueror.
“If you don't believe me ,ask to Captain Yankeeconqueror”
And he doesn't use translation software!!
Idjit rabbit!
Either they don't have the money and any legal action is a delaying tactic designed to elicit a judgment which Argentina can then refuse to agree to...
Or
As they've made a statement that they will not pay the hold outs or 'vultures' and they do not want to lose face by being seen to go back on their word, they are willing to risk defaulting with all the horrible consequences if they are ordered to pay everyone equally.
It seems to me fairly obvious that they are playing for time. They've never paid the debts due to the United States, much to the annoyance of the President. CFK tried to get the US to back her Falklands claim at the recent conference, but Obama refused. He knows that he's dealing with a mad woman, off her medication.
I honestly believe that they do not have the funds to settle and even if the Judge allowed them to pay only the restructured bonds, then they would still find some excuse not to pay. This appeal is a time waster.
@51 Just think about it this way. When was the last time argieland told the truth?
@52 Don't be. They not only elected 'em, they re-elected 'em. That has to take a particular brand of stupidity.
If you mean this:
blogs.reuters.com/felix-salmon/files/2012/04/US-Br.pdf
...then it's dated April 2012 so is a little old to be relevant any more.
Here is the proof,
You can add the crew Zhivago to the Captain Yankeeconqueror ship.
Either they do what the client wants (Argentina) or the Courts or the Bondholders. They're in a pickle and it really isn't good business to put a 3rd party in the middle because their clients are trying to skirt the law.
I think Griesa is smart and he'll figure out a way to get everyone or no one paid and put Argentina in a corner. He is sick to death of the RG antics and has reached the end of his rope.
We should hear shortly
www.weeklystandard.com/blogs/radical-leftism-fails-argentina_663648.html
21st-century Peronism has squandered a commodity boom, destroyed an economy, and made Argentina a global pariah
you can't conquer by talkíng yourself only wandering on intérnet.
Why would people need multiple user IDs just to insult?
It seems they have no relevant arguements left.
A “Sussie” variant has appeared - the Angel of Death for any thread.
Please Editor, shut it down.
Global pariah is a bad thing? If it means not being friends with the likes of the USA, IMF, UK, Spain, Germany, Italy, China, France, et al, which seek to screw us over at any nook and corner... then I'm a proud pariah.
www.gregpalast.com/the-globalizer-who-came-in-from-the-cold/
Republica del Perdon'
Republica de Volver a Empezar
República de Idiotas Viejos
she certainly has no interest in it..
Who are these more than all 4 Argentines ?
Though we probably won't have to worry about you for much longer lol.
Four? I can only count three. Well I suppose if you give Dove the benefit of the doubt that he's not Think. That could make four I guess.
www.gregpalast.com/the-globalizer-who-came-in-from-the-cold/
•Canada •U.S.A. •Belgium
•Finland •New Zealand •Norway •Singapore •Thailand •Malaysia •Mauritius •Switzerland •England.
U.S. STATES? DIFFERENT STORY!
•1841 Mississippi, in the “Deep South” STILL hasn't payed bonds.
•1865: Whole Deep South defaults in Civil War.
•1873 Mostly 'Red' states/Deep South) in the Long Depression mobile.usnews.com/opinion/articles/2009/05/07/long-depression-of-the-1800s-and-the-technology-it-seeded-offers-hope
•1933 Great Depression (Arkansas, Deep South region, defaults)
If the IMF, WB and such is so bad, I do not see a vast amount of the 212 nations on the earth spewing vomit like Argentina. But then again, no one has mismanaged credit as bad as the RG's and defaulted to the level of the RG's. I guess when you can not get credit, the concept is evil.
This is your chance to look like a smart guy and not a tool like you typically do. Can you do that BK?
Sussie you have to do something about that rage, and your grammar!!
I enjoy posting in this port-a-john grammar crap web site
I am confident enough to post under the same name, unlike you! Now go wash your pie!
Please repost but hide the smut, I want to see what you said!
Who is Michel?
I support your proposal.
The first receiverships in a couple of years will be the EU, UK, and USA. How do you say 'receivership' in Mandarin?
If CFK does not do something spectacular pretty soon,
Then fate will take a hand, and do it for her.
.
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