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Argentina confident US Supreme Court will take its litigation case with hedge funds

Monday, June 2nd 2014 - 07:33 UTC
Full article 14 comments
 The US Supreme Court is expected to make an announcement of 12 June The US Supreme Court is expected to make an announcement of 12 June
During the brief presidency of Adolfo Rodríguez Saá, in December 2001, Argentina defaulted During the brief presidency of Adolfo Rodríguez Saá, in December 2001, Argentina defaulted

President Cristina Fernandez administration has high hopes that the US Supreme Court will take its long running litigation case with holdout hedge funds that refused to accept sovereign debt rescheduling after Argentine defaulted in 2001.

 “The economic team's expectations is that the Supreme Court of the United States take the case,” said deputy Economy minister Emmanuel Alvarez in an interview with a Buenos Aires broadcasting station.

The Argentine government is fighting a decisive battle in the US courts, due to the fact that a favorable ruling would mark a new victory on the road to ending the default status decreed during Adolfo Rodríguez Saá's short presidency in December 2001.

Last May 25, Argentina made their final presentation to the US Supreme Court, in which it was requested that rulings from lower courts in favor of the 'holdout hedge funds be reviewed'.

The most positive outcome for Argentina would occur if the tribunal accepts the case and considers that a US lower courts wrongly interpreted the concept of pari passu, which ensures that the country must treat all creditors equally.

Previous rulings have ordered Argentina to pay up front around 1.33bn dollars to hedge funds which bought the “junk bonds” in 2008 and did not enter the 2010 debt swap.

If Argentina is forced to pay, those creditors who did enter the swap could start an avalanche of legal proceedings, which could put Argentina in danger of another default.

Alvarez also commented on the deal made by Economy minister Axel Kicillof with the Paris Club to pay debt obligations, a move that could possibly reopen international credit lines for Argentina.

“We do not believe that external debt is bad per se. It is good when taken to finance infrastructure projects that allow the country to grow and it is bad when used for gambling,” Álvarez explained.

“Argentina pays up as long as the payment conditions are sustainable for the country,” he asserted, adding that “the vulture funds' business is all about gambling.”

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  • reality check

    As long as the payment conditions are sustainable.

    So basically they are stating, if their financial status changes after signing the contract, receiving the money, they are not going to meet their repayment obligations, or, we will pay if we can. If we can't, we won't!

    Erm! And in at the same time they are hoping for the reopening of international Credit Lines.

    Am I missing something here? Because this sounds crazy.

    Who the hell is going to lend to them after hearing that?

    Jun 02nd, 2014 - 07:56 am 0
  • VultureFundsAreWrong

    “So Basically they are saying..” --> This is just your interpretation and assumption.
    The country is doing the right thing. They are not hoping for the credit lines. They already are in the market and their bonds were bought by many financial institutions and were oversold. Get your facts straightened out.
    The Vulture funds and NML are one without any merit as they have proven in their past how they have brought cases after cases to squeeze money from poor countries in Africa.
    What the country is doing now and has done in past is in accordance with wider international efforts where debt had to be restructured to bring back the economy of the country.
    There is no question who will lend them as they have sold bonds recently and many bought them.
    Argentina is collaborating with many financial institutions and companies like Chevron who are investing big time in their growth.
    This notion of that no one is supporting them is just plain lies by Vulture funds.
    You are really missing the real NEWS!

    Jun 02nd, 2014 - 10:00 am 0
  • ChrisR

    @ 2 VFAW

    If the SCOTUS acts in accordance with the law (and does not try to set precedence for whatever reason) they have to rule in favour of the existing decisions which were based on contract law.

    Without upholding contract law the US would be damaged beyond recognition as far as commercial dealings are concerned, just like your damnable country is now.

    The facts are very simple: The Dark Country stuffed all the investors by a unilateral decision to give a massive haircut to the investors. Banks and other associations who could pass the loss to their customers did so, ALL of us paid for that. The small investors couldn’t and therefore did not enjoin with the banks. Some of them sold out to NML to get something back at least: they TRUSTED you to do the right thing and you did the usual Argentine practice of robbing everybody.

    BUT, and there’s always a but, NML are not intimidated by robbing bastards such as Argentina because under the contract terms the deciding law is American.

    Oh dear, you are in for a real disappointment – just like the little investors “you lot” screwed.

    And, you deserve it.

    Jun 02nd, 2014 - 11:58 am 0
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