Tuesday, July 9, 2013
New York appeals court recognises 'Vulture Funds' entitled to payment
Reena Raggi, Barrington Parker & Rosemary Pooler, the judges of the New York Appeals Court
The Appeals Court of New York's Second Circuit has released their opinion on Argentina's defaulted bonds. The latest order states that the court rejects appeals made against the judgement of October 26 2012 which had obliged Argentina to pay 100 percent of their debts to creditors.
Those same creditors had twice rejected a debt swap in 2005 and 2010, and had delegated to judge Thomas Griesa how to determine the form of payment and application of other motions.
The Appeals Court used the Latin phrase "nunc pro tunc", a retroactive rejection, which means the original ruling of October 26 is reinstated.
Finally, the Court indicated that they would send a judicial order breaking down the latest sentence.
The next steps, regarding the green light Griesa could have to decide the method of debt payment, the existing motions suspending the ruling, and Argentina's possible appeal to the Supreme Court, will now have to be determined by the relevant parties.
It is worth recalling that Argentina's case had focused solely on two aspects of the Court's ruling, which confirmed the judgements of judge Thomas Griesa and, in the country's view, affected "federal questions that only the Supreme Court can analyse."
For the first, the statement held that "if a court violates the Law of Sovereign Immunity, upon making monetary demands against a country through the issuing of orders that restrict the use of assets not just in the US but outside its territories, this appears to go outside the reach of what the Law dictates.
The second point affirmed that "If a Federal Court can issue injunctions that predate the sentence, forcing a country to pay a purely monetary demand, it goes against the jurisprudence of the Supreme Court, since traditional, just solutions do not include orders designed to force either payments agreed contractually or the specific compliance with monetary obligations."
The funds that are pressing Argentina for US$1.33bn in sovereign bonds held in their investment portfolios are led by NML Capital and Aurelius Capital Management, in a group that includes minority holders.
Those same creditors had twice rejected a debt swap in 2005 and 2010, and had delegated to judge Thomas Griesa how to determine the form of payment and application of other motions.
The Appeals Court used the Latin phrase "nunc pro tunc", a retroactive rejection, which means the original ruling of October 26 is reinstated.
Finally, the Court indicated that they would send a judicial order breaking down the latest sentence.
The next steps, regarding the green light Griesa could have to decide the method of debt payment, the existing motions suspending the ruling, and Argentina's possible appeal to the Supreme Court, will now have to be determined by the relevant parties.
It is worth recalling that Argentina's case had focused solely on two aspects of the Court's ruling, which confirmed the judgements of judge Thomas Griesa and, in the country's view, affected "federal questions that only the Supreme Court can analyse."
For the first, the statement held that "if a court violates the Law of Sovereign Immunity, upon making monetary demands against a country through the issuing of orders that restrict the use of assets not just in the US but outside its territories, this appears to go outside the reach of what the Law dictates.
The second point affirmed that "If a Federal Court can issue injunctions that predate the sentence, forcing a country to pay a purely monetary demand, it goes against the jurisprudence of the Supreme Court, since traditional, just solutions do not include orders designed to force either payments agreed contractually or the specific compliance with monetary obligations."
The funds that are pressing Argentina for US$1.33bn in sovereign bonds held in their investment portfolios are led by NML Capital and Aurelius Capital Management, in a group that includes minority holders.
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