MercoPress. South Atlantic News Agency

Holdout bondholders tell US Supreme Court Argentina's case is “undeserving of review”

“Argentina has put itself in the position of a fugitive from justice” said former US federal judges in support of holdouts

Holders of Argentine sovereign debt this week asked the U.S. Supreme Court not to hear that country's appeal of lower court decisions ordering it to pay them 1.33 billion dollars in a case Argentine officials warn could force it to default on its sovereign debt.

 Wednesday's filing, which came in response to Argentina's petition in February to be heard by the highest U.S. court, was made by a group of so-called “holdout” bondholders who refused to accept Argentina's two debt-restructuring offers after the country defaulted on 100 billion in 2002.

Argentina is seeking to reverse the rulings that say the country must make full payment to the group, which is led by hedge funds Aurelius Capital Management and NML Capital Ltd, a unit of billionaire Paul Singer's Elliott Management Corp.

In Wednesday's court filing, lawyers for the bondholders called the case “undeserving of review,” knocking Argentina's position that the lower court violated the Foreign Sovereign Immunities Act by allowing for the arrest in the U.S. of property belonging to a foreign state.

The lower ruling, in the U.S. Second Circuit Court of Appeals, “does not exercise dominion over any sovereign property,” the bondholder group said, “but merely holds Argentina to its commitment to treat its debts to [the bondholder group] equally with its other obligations.”

The group added that Argentina may wind up ignoring any court ruling anyway.

“By Argentina's lights, it has the final word,” the group said, which is “reason enough” not to hear the case.

A group of former U.S. federal judges, including Michael Mukasey and Michael Chertoff, who served respectively as Attorney General and Secretary of Homeland Security under former President George W. Bush, also urged the Supreme Court not to hear the matter. In a so-called “amicus” brief, the former judges, who are not parties in the case, suggested Argentina is trying to “undermine the authority of judicial proceedings” by saying it won't comply with adverse rulings.

“Argentina has put itself in the position of a fugitive from justice who eludes law enforcement authorities while seeking to press an appeal,” said the judges.

Argentina has said the bondholder group tried to profit by buying its debt at a deep discount after its default, then attempting to thwart the country's efforts to restructure through debt swaps.

The outcome of the closely watched case could impact future sovereign debt restructurings. The Supreme Court justices are likely to have a first look at whether to take the case sometime in June.