MercoPress. South Atlantic News Agency

Mediator Pollack meets with Argentina and holdouts' solicitors

Pollack also anticipated he would not be making anymore statements on the discussions

Mediator Daniel Pollack named by New York Judge Thomas Griesa to try and help reach an understanding in the long running dispute between Argentina and the holdout hedge bond holders, said he had already held meetings with the solicitors from both sides. However he only revealed that discussions will continue until a resolution is reached.

 “Both sides, through their representatives have agreed to continue discussions in a confidential manner to facilitate the possibility of a future resolution” said Pollack. The mediator also pointed out that he would not be making any more statements on the issue.

Last week the US Supreme Court decided not to consider the Argentina/holdouts litigation and thus returned the case to Judge Griesa who lifted a 'stay' injunction and will determine how Argentina will make effective the sentence that forces 100% payment to the holdouts, which are also identified as speculative funds or vulture funds.

The sum involved in 1.33bn dollars plus interests, and for this purpose Judge Griesa named Pollack, a star expert in financial negotiations to mediate in the dispute.

Argentina on June 30 must honor a coupon on the restructured bonds which amount to 92% of the 2001 defaulted sovereign bonds, while the holdouts have a favorable pari passu sentence which means they must be paid in full at the same time as other creditors.

The Cristina Fernandez administration argues that paying holdouts or vulture funds will be most unfair with the holders of restructured bonds, (who accepted significant haircuts) plus the fact that legal consequences such as the RUFO clause could expose the country to a technical default.

RUFO stands for Rights Upon Future Offers, and is effective until 31 December 2014, which means that the restructured bond holders could initiate actions against Argentina to collect the full amount of the bonds, if as the ruling stands forces 100% payment to holdouts.

Argentina has also requested Judge Griesa for confirmation of the stay injunction so as to have time to negotiate with the holdouts in a reasonable time period. Contrary to public statements in the last few years, in a letter addressed to Griesa the administration of President Cristina Fernandez says it will act in good faith and is committed to honor 100% of creditors.

Daniel Pollack was named as “special master to conduct and preside over settlement negotiations” in the case, and may also conduct talks in public or in private, and that both parties are to offer him their “full cooperation.”

Pollack is an attorney with the McCarter & English law firm, and specializes in financial litigation.