Sunday, December 30, 2012

Argentina asking court to revert order on debt holdouts

BUENOS AIRES, Argentina ? Argentina is asking a US appeals court to reverse an order for the country to pay $1.33 billion to "holdout" creditors who refused to join two swaps for the country's defaulted debt.

Argentine government lawyers said in papers filed late Friday that the order violates the country's sovereignty. The lawyers said the order also threatens service on at least $24 billion of the county's restructured sovereign debt, impairs the rights of third parties and puts global debt markets at risk.

"The Amended Injunctions have no basis in law, are inequitable, and threaten to wreak havoc on countless innocent third parties, which have already suffered losses due to the plunge in their bonds' value provoked by the insecurity that the Amended Injunctions have created in the market for Argentina's New York law-governed bonds," the briefing said.

"This harm to private and sovereign creditors, as well as to New York law and New York as a place to do business, will only grow if the Amended Injunctions are affirmed. "

The US 2nd Circuit Court of Appeals in New York ordered the country on Oct. 26 to pay the holdouts an equal amount whenever it makes payments on other debt that has been restructured since the country's economic collapse 11 years ago.

It agreed with US District Judge Thomas Griesa, who ruled that with more than $40 billion in foreign reserves, Argentina can afford to pay. The ruling gave Argentina a difficult choice: pay all bondholders equally, or pay none of them and risk going into default.

The court then returned the case to Griesa who ordered Argentina to pay the $1.33 billion into escrow for holders of its defaulted debt and banned banks and other third parties from intervening. Griesa based his ruling on the principle of "pari passu," or equal footing, which says debtors can't pick and choose between creditors.

President Cristina Fernandez called Griesa's ruling "judicial colonialism," and Argentina sidestepped the impending economic chaos when the order was suspended by the appeals court on Nov. 28.

But just the threat of the payment deadline set by Griesa had harsh outcomes. In the week after he issued his order, the cost of maintaining Argentina's overall debt soared in trading on U.S. and European bond markets and the cost of insuring those debts spiked.

"A court can arguably enjoin a foreign state from engaging in a commercial activity within the United States. But it cannot issue an order to force or preclude a foreign sovereign to act or not act within the limits of that sovereign's own territory," Argentina's brief said.

Source: http://www.nypost.com/p/news/business/argentina_asking_court_to_revert_giQGh4OQoUGm3y1dV4wsGL?utm_medium=rss&utm_content=%0A%20%20%20%20%20%20%20%20Business

suge knight

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.