Judge Thomas Griesa seems to be hurrying to take his vacation at the end of the year with a decision already made on the case of the Court of Appeals of New York where it ordered the government to pay a group of “vulture funds” and 13 smaller Argentine investors.

 

La Nacion

Griesa hurries debt payment to creditors

 

Thursday, November 08, 2012

 

By Martín Kanenguiser

 

Judge Thomas Griesa seems to be hurrying to take his vacation at the end of the year with a decision already made on the case of the Court of Appeals of New York where it ordered the government to pay a group of “vulture funds” and 13 smaller Argentine investors.

 

For this reason, he called a hearing for tomorrow at 10:00am in his office in the Southern District of Manhattan, despite the damage this area sustained from Hurricane Sandy last week.

 

Sources linked to one of the bondholder groups benefitted by the ruling told LA NACION that in the  meeting, confirmed last night, the final decision could be given by the judge around the formula for payment and the responsibility of the banks that pay the bonds.

 

In principle, the attorneys for Argentina, the law firm of Cleary, Gottlieb, Steen & Hamilton, will present before the judge by saying that the ruling of two weeks ago, which sided with the holdouts, was “suspended”, said another source linked to the judicial case.  This would allow the government to buy time to define its strategy, in the face of market fears of a technical default if it doesn’t comply with the order of the upper court.  However, in a brief filed two days ago by Griesa, the attorney for NML-Elliott, Roger Cohen, said that the sentence already is in full effect and that the government only is trying to delay it.

 

"Since the Second Circuit made its decision, the President of Argentina and her ministers have declared their intention never to comply with it.  Cristina Kirchner said that Argentina will pay the bondholders that entered the swaps but will not pay one dollar to the vulture funds.”  Cohen suggested that “Argentina is in the process of trying to employ and exploit every delay tactic necessary to evade this court.”

 

For this reason he asked that the payment to the creditors be resolved as soon as possible, with the criteria of paying the 100% that they demand and not with the same haircut that bondholders suffered when they entered the swaps to exit the default in 2005 and 2010.  Attorneys on Wall Street and representatives of the American government said that this pretention couldn’t be recognized because it would lead to a boycott of any debt restructuring process in other countries.

 

The second question that NML asks is that “an order be adopted” to make it clear that, with the court ruling, the order of “equal treatment not weighs on Argentina, its agents and those which act in function” of paying normalized debt.  On that, within the government they are confident that, once Griesa fixes his criteria – be it tomorrow or in the coming weeks – they will be able to put forth their arguments to appeal the ruling of the higher court.

 

The Economy Ministry – which until last night had not been notified of the hearing – will hold on to this card until it sees the “fine print” that the court left for Griesa to clarify.

 

Officials admit that sovereign bonds were submitted to a heavy battering from massive winds in the first days after the ruling of the higher court, but they believe that now the market is taking a “wait and see” approach. 

 

The majority of the reports from analysts on Wall Street say that it will be very difficult for Argentina to evade the order of the court, which ordered the payment of US$1.333 billion, because it not only involves the government but also Bank of New York – the official US pay agent – and the attorneys at Cleary.  “If one of them helps the government try to evade this ruling it could be treated as being an accomplice to a crime,” said an attorney with access to the case.

 

The government insists that the Court of Appeals ruled “in the abstract” without benefitting a group in particular, by which it trusts Griesa will maintain this criteria.