Argentina vs. vultures: U.S. Court to hear on April 21
For the first time it has accepted having the parties give their arguments. It’s a parallel case to the underlying one.
Thursday, February 13, 2014
by: Carlos Burgueño
The strategy of the government of gaining time and extending to the maximum the definition of the lawsuit against the vulture funds in the United States seems to be giving the government results. The U.S. Supreme Court yesterday accepted listening to the parties to then issue a ruling about if it will consider taking the case or not; and it set a date of April 21 for a public hearing among the parties. That day, the attorneys representing Argentina will be able to put forth the position of the country before the case at the heart of the “trial of the century”, according to the Financial Times. The Court will then take at least two months to decide if the conflict has the necessary importance to enter into the very limited list of cases that the U.S. highest court takes up. The haring is linked in reality to a filing from Paul Singer’s vulture fund, Elliott, about the petition to be able to attach funds from Argentina deposited in banks located in the United States and in the New York branch of Banco Nacion. However, the Supreme Court itself sent a clarification to the lawyers at Cleary Gottlieb Steen & Hamilton (CGSH) that in the oral arguments it will be permitted to touch on the underlying case and argue the position of the country before the complaint from Elliott, Olifant, Blue Angel and 20 other vulture funds and holdouts. Court sources had also let it be known that it could be the last chance for the country to make its arguments, before the final decision by the court to take the case or not.
Inside the Debt Renegotiation Unit that former Economy minister Hernan Lorenzino runs, and which is coordinating Argentina’s position before the American high court, it is believe that this hearing, together with the filing on Monday, February 17, will be the last two chances to convince the tribunal about the need to take the case and issue a ruling. If this doesn’t happen, equally the fact of the existence of the hearing of April 21 will give the government precious time for at least until June to be able to start an eventual and serious negotiation with, at least, some of the vulture funds. At that height, also, according to the schedule of Axel Kicillof’s Economy Ministry, the conversations between the country and the Paris Club and Repsol will already be closed or at the point of being decided in favor.
From CGSH yesterday they were assuring that the hearing on the 21st was possible due to the change in strategy in facing the Supreme Court, by hiring ex-solicitor general Paul Clement, named by George Bush and serving until 2005. Consequently, from the Republican Party, but acquainted with many justices on the highest court, he began to study the case in November an put himself in contact with two of the Court’s justices, John Roberts and Samuel Alito. He worked directly with both, who are of Republican background, in his days as Solicitor General. Clement’s strategy is to now put before the Court the consequences upon the whole financial system of upholding the lower court rulings of Judge Thomas Griesa and the appeals court in favor of the vulture funds, where Argentina is ordered to pay the US$1.33 billion in cash that Elliott and the rest demand. The Republican will try also to have Roberts and Alito listen to the current U.S. Solicitor General, his successor, named by President Barack Obama, Donald Verrilli, who already filed a brief before the Court supporting the position against the vulture funds and asking that the high court take the case. Argentina, CGSH and Clement know that it’s very difficult for the Court to turn back terminal and unanimous rulings, especially from the Court of Appeals in New York. However, the idea now is to buy time and that the decisions take at the most beyond June.
Meanwhile, the parallel strategy, also difficult, will accelerate. The negotiation between private parties to pay the litigating vulture funds indirectly with public money, but through third parties. The idea is to turn to the two friendly vulture funds throughout this process: Gramercy and Fintech. These, especially the first, will offer to buy Paul Singer’s debt in default in cash and at a reasonable price, with money that the bondholders who entered the swap will themselves contribute. It would be a repetition of the agreement that Gramercy closed with Hernan Lorenzino also in October 2013 over the lawsuits that the ex-vulture fund had bought from various American companies that had won against Argentina in the World Bank tribunal, ICSID. For now, for Singer, the Argentine proposal is “bizarre.” In reality, the owner of the Elliott fund is waiting for the Court to rule in his favor, to then begin, at that moment of maximum strength, the final negotiation with the country.