La Nacion Believing that U.S. courts will not change the ruling for the holdouts

La Nacion

Believing that U.S. courts will not change the ruling for the holdouts

 

Tuesday, February 19, 2013

 

By Martín Kanenguiser | LA NACION

 

Without room for a tie, the government can only aspire to shrink the margin of the defeat against the holdouts in the public hearing on the 27th that will be held in the Court of Appeals in New York, with eyes toward deciding the case of Argentina’s debt between April and May.

 

The parties involved in this case anticipated to LA NACION that the most likely result of this encounter is that the judges won’t part too much from the ruling of October of last year, when they ordered the government to pay a group of vulture funds and retail investors US$1.33 billion plus interest.  The Economy Ministry did not respond to questions about this issue.

 

"They are going to listen to everyone to not leave any doubt on the court’s impartiality, but the judgment is set and it would be difficult to depart from it,” said a legal expert involved in the case from New York.  The big question is if the judges will uphold the criteria set by the lower court judge, Thomas Griesa, around the method of payment and the responsibility of third parties (payment agents).

 

Griesa determined that the payment of the sentence must be made in cash and all institutions involved in the payment process of Argentine bonds must be considered responsible for that payment.

 

Immediately, the court stayed those orders and accepted listening to the bondholders that entered in the swaps of 2005 and 2010 and to the American government, who all put great emphasis on the systemic damage potentially provoked by this ruling.

 

However, among the plaintiffs, which were already very close to collecting in 2012, confidence reigns.  “The court will back Griesa and every day that passes is worse for Argentina because since the court stayed the sentence, it has done nothing and four months have gone by,” said a source from New York to LA NACION.

 

The implicit suggestion that the government could propose reopening the swap if the court reverses the ruling, they say, won’t work.  “It’s a fantasy, it’s not credible nor important for an American court,” the source shot back.

 

In turn, the source admitted there is a chance that the Court of Appeals could exempt the main payment agent in the United States, Bank of New York, of responsibility.  “There is a minimal chance that it happens,” he said.  In this case, the plaintiffs (NML and Aurelius, together with 13 retail investors from Argentina) will have to wait for the next payment that Argentina makes on American territory to see how they will make good on  the collection of their sentence.

 

Attorney Eugenio Bruno, partner in the firm Garrido & Asociados, said that “one cannot rule out anything, either a totally unfavorable ruling for the government or an abstract ruling; that’s to say a ruling in favor of the plaintiffs on underlying issues (pari passu, 100% payment) but respecting the trustee of Bank of New York and therefore they cannot execute the attachments.”  About the hearing, he said that “there will be a lot of pressure and tension with the attorneys speaking for the short time they’ve been given and the quantity of the legal things they have to express.”  The plaintiffs will have 20 minutes; Argentina, 15, and the bondholders that entered the swap, 7 minutes, equal to BoNY.  

 

His peer, Marcelo Etchebarne, partner at Cabanellas, Etchebarne, Cabanellas, Kelly, argued that “thanks to the intervention of the bondholders in the court, contrary to its previous ruling, it allowed a process of appeal, where all can be heard, even in the February 27 hearing.”

 

This, the expert said, “shows two things at least: it showed Argentina the abyss and gave it time to amend its stance, to negotiate with the actors, reopen the swap, do away with the lock law, honor the sentences of the ICSID and UNCITRAL and, on the other hand, protected the case so that no one can say he was not heard.”

 

On that, attorney Pablo Giancaterino, of Díaz Reus Argentina, said that “conditions are set for the ratification of an agreement between the parties.”

 

Former Finance Secretary Daniel Marx argued that if the court upholds its ruling in the coming two months, “Argentina has the chance to appeal to the U.S. Supreme Court and, also, insist on a plenary of the Court of Appeals,” called en banc.  Both possibilities, legal experts explained, are not simple: in the case of the high court, it will have to be proven that there was a violation of federal law; in the second, the court only accepts seven or eight cases per year and in this it would have to accept changing its own judgment in a diametrical manner.  Around the payment, Marx said that “Argentina could explain that the swap offered is a payment of a kind that seeks not to discriminate between the bonds that the judges mention” in their ruling.