LA NACION: “Offensive of the vulture funds in court”
They asked the judges in New York to execute the sentence against the country
by Silvia Pisani | LA NACION
WASHINGTON.- In a new offensive in their claim against Argentina, the so-called “vulture funds” asked yesterday for the definitive end of the injunction staying the order that they be paid US$1.3 billion, using for it the money the country sends to New York to pay the bondholders that did accept the swap.
With the signature of Elliot Management and Aurelius Capital, the petition uses, among other arguments, statements from President Cristina Kirchner in public speeches in Argentina.
Among them, when she spoke on August 24, suggesting the possibility of seeking “alternative mechanisms” of payment for bondholders that did accept the swap on their paper, in a manner of getting around the jurisdiction of New York and saving it from any attachment on the funds sent for that end. While the idea, until now, has not been carried out and doesn’t seem to have moved forward within the government’s leadership, for the plaintiffs it is clear proof of the intention to “mock” American justice and the courts’ rulings.
They point in equal sense to the unforgettable sentence of one of Argentina’s defense lawyers, Jonathan Blackman, when he said before the Court of Appeals of New York that Argentina “will not voluntarily abide” by an adverse ruling in the legal process against the so-called holdouts.
With the signature, first, of Judge Thomas Griesa and the upholding, then, of the Court of Appeals of New York, Argentina was ordered to pay US$1.3 billion to those creditors.
However, the court itself imposed the stay while awaiting the process, first, of a new and difficult review requested by Argentina, as well as an eventual intervention of the U.S. Supreme Court. It’s that measure that now they are asking to remove.
The move had been predicted by those who are following the so-called “trial of the century.” “It’s to be expected that, at some point, the plaintiffs would ask for the lifting of the stay,” said attorney Richard Samp, of the Washington Legal Foundation, located in this city, to LA NACION.
Expanding on his opinion, while with all the caution in the case, Samp found it “unlikely” that the Court of Appeals would be inclined to lift the stay at this time. A similar expression was made by Harry Weisburg, of Shearman & Sterling, who sees little change in the stay until all doubts are dispelled about an eventual participation by the Supreme Court. “The Argentine president not only affirmed the decision to violate the scope of these courts, but she even explained how she is going to do it,” argues the brief from the plaintiffs. The text warns that, by maintaining the stay, their rights could be harmed.
The brief says that the Court “should not allow Argentina to take advantage of a stay to evade” a ruling and asked, as such, that it be immediately lifted. The Economy Ministry said that it received the brief and that its attorneys are “analyzing it.”
CLARIN: “Vultures ask for ruling to be applied to the country”
The funds suing Argentina, NML of Paul Singer and Aurelius, asked the Court of Appeals of New York to life the stay that has suspended the ruling in which it was determined that Argentina must pay the holdouts 100% of what is owed them (US$1.33 billion) at the same time it pays the holders of restructured bonds.
In the brief, the funds argued that, one day after the Court adopted the ruling, Cristina Kirchner gave a speech “in which she articulated her audacious plan to annul it.” They explained that the plan consists of “swapping restructured bonds for new identical ones, which would be paid exclusively in Argentina.” “As the President candidly admitted, this important change is designated to ‘avoid potential attachments’ which means ‘to impede the U.S. courts from making her respect the fact that the ruling of this Court was upheld.”
The vultures then asked Judge Griesa to establish if, with her speech, Cristina violated the so-called anti-evasion order, which he set in March 2012, and which prohibits Argentina from taking measures to evade the ruling. On October 3, Griesa determined that the plan would violate the anti-evasion order and asked for information from Argentina. According to NML, on October 11 Argentina sent a letter saying it “has no plans to violate the order.” If the Court responds positively, when it makes the next payment to the bondholders the country will also have to pay the vulture funds.
EL CRONISTA: “Holdouts ask U.S. court for Argentina to pay US$1.5 billion now”
They argue that the government wants to gain time to avoid attachments and not honor the ruling against it. The stay in favor of the country allows it to pay normalized debt
ESTEBAN RAFELE Buenos Aires
The holdouts asked the Court of Appeals for the Second Circuit in New York to immediately lift the stay that is benefitting Argentina and to order the country to pay the sentence of US$1.5 billion. The plaintiffs understand that, with the stay, the government is gaining time for evading attachments.
The brief from the funds NML Capital and Aurelius arrived two weeks after the Supreme Court rejected taking Argentina’s first appeal, but with two other appeals from the country pending.
In a ruling contrary to the country, on August 23, the Court of Appeals ordered the payment of that sum to the vulture funds, but with a stay that gave the government room to make all possible appeals and stretch out the process.
The sentence also ordered Bank of New York (BONY) to retain payments on normalized debt to satisfy the holdouts’ claim. Three days later, President Cristina Fernández announced by national broadcast a plan to change the bonds under New York legislation for others of national law and thus avoid possible attachments.
The vulture funds took advantage of that announcement, that still has not been carried out, to remark that Argentina wants to evade a sentence against it, and for that reason asked for the stay to be lifted. “As President Kirchner candidly admitted, this “important” change was designed “to avoid potential attachments,” they said in the brief, with citations from Cristina’s speech on August 26.
“This Court (of Appeals) must not allow Argentina to take advantage of the stay to achieve its objective of evading the order (to pay the sentence),” the litigants complained. They had asked the same thing days ago, on October 3, from lower court Judge Thomas Griesa. The holdouts recalled that the Argentine attorney said in a hearing with the court of appeals, on February 27, that the country “will not voluntarily obey” a sentence as was issued, and that the Court called the State a “recalcitrant debtor.”
Also, the litigants argued that the Supreme Court already rejected the first Argentine appeal, and predicted that it is “unlikely” that it will take the case later on. “If Argentina raises a second petition for certiorari (a recourse before the highest court), it can expect the same result: negative,” said the holdouts.
On August 26, the Court of Appeals imposed the stay in favor of the country because it had an appeal to the Supreme Court pending, which was resolved on October 7. Official sources understand that the stay is remaining in force during the whole process, which could take up to a year. Argentina has two procedural instances left: an en banc appeal, with a plenary of 13 judges of the Court of Appeals, which is in course, and a new recourse before the Supreme Court, which must be filed within three months of the eventual refusal from the en banc.
For attorney Marcelo Etchebarne, partner at the firm of Cabanellas Etchebarne Kelly, “the appeals process continues and the arguments by which the stay was obtained remain in force while the appeals go on.” The attorney, expert in this kind of case, said that the Court of Appeals will decide the en banc appeal for considering if the stay is lifted.
Argentina must pay some US$300 million corresponding to the Discount bonds at the end of the year. It’s the last commitment under foreign legislation of the year. “What is relevant is what the BONY thinks. If it thinks the stay is in force, it will pay. If not, it will ask the court,” said Etchebarne.
Last night, attorneys for the Economy Ministry were reviewing the case. The Palacio de Hacienda declined to comment.
AMBITO FINANCIERO: “The vulture go all the way: they ask for the ruling to be applied”
• Elliot files brief for the “stay” to be lifted
• Debt payment of US$199 million in December in New York is in danger
by: Carlos Burgueño
The vulture funds yesterday asked the Court of Appeals to “immediately” rule to lift the “stay” and that Argentina not be able to freely pay interest on debt in New York coming due in December. They did so through a brief of 20 lines presented by the fund NML Elliot of Paul Singer, signed by his attorney, Theodore Olson, arguing that since Argentina “is only seeking to gain time” and has already “declared that it will not abide by the ruling of American justice if it is negative,” then it should “accelerate the timetable” and “order the country to honor its obligations.”
With this, the fund that last year attached the Frigate Libertad in Ghana is changing strategy in the courts of the United States and is now asking to speed up the court’s timetable. Pointedly, what the brief asks for is that the second American court instance speed up the timing for the presentation that Argentina made two months ago for the 13 judges of that instance to decide the case against the vulture funds. This recourse, called “en banc”, was a strategy put together by attorneys Jonathan Blackman and Carmine Bocuzzi, of the firm of Cleary Gottlieb Steen & Hamilton (CGS&H) to gain time before what eventually happened would take place: that the Court of Appeals of New York would rule against the country in August and argued that the ruling from the lower court Judge Thomas Griesa, which ordered Argentina to pay US$1.33 billion in cash to the vulture funds. The appeals court also maintained the “stay” which suspends the country from the punishments of having its payments attached in New York on debt until the U.S. Supreme Court decides if it takes the case or not. The highest U.S. court already decided a first appeal against the country by not taking the case, but still has to decide on the “en banc” (which is the 13 judges of the New York appeals court who decide if they will change the ruling of the three judges, something utopic), even as there is time for another appeal.
Following the procedural timetable, first the “en banc” must be decided and then the case passes to the Court. What Olson asked for in his brief is that this instance already decide, and that the “stay” be lifted and that the highest court decide rapidly.
If this presentation was echoed in the appellate court (something difficult to imagine) Argentina would have problems paying interest coming due in December on debt issued under jurisdiction of New York. These are some US$42 million on the 2nd of that month on Global 2017 and two payments on the Discount for US$157 million on December 31 (120 for emission in the swap of 2005 and another 37 by the swap of 2010). In total they are US$199 million that Argentina must pay in the last month of the year, money that for Olsen’s request to succeed would be attached under the “amicus curiae” clause (to distribute among all the creditors in debt payments, whether they subscribed to the debt swaps or not).
Obviously, Argentina already announced that it will not accept this situation and will pay the debt in Buenos Aires, according to what was explained by Cristina de Kirchner herself after hearing of the ruling by the Court of Appeals of New York. For now, the attorneys from the firm of CGS&H are confident that the second instance will stick to its original timetable and that the decision of the court will take until March or April of next year.
Two days ago, Olson spoke before the CNBC network in the United States and affirmed: “I do not believe there is any chance that the U.S. Supreme Court will take this case. First, they have Argentina saying that it will defy anything the court decides. Second, it’s an issue of New York law. One must points out that what the court said is that it’s important for people who entered the New York market and other parties from the U.S. to live up to their obligations and be forced to do so. This is fundamental for the honoring of the law and for our economy,” he said on U.S. television. According to the attorney, who is a Republican and who once defended George W. Bush so he could be elected President of the United States, “Argentina is a country outside the law. A recalcitrant debtor that has defaulted time and against in recent years.”
EL CRONISTA: “To ‘deepen’ today could mean something new”
Hernan de Goñi, Deputy News Director
The last legal offensive against Argentina that the vulture funds executed puts pressure on a lawsuit that still has an open ending. After the U.S. Supreme Court decided not to take the case, awaiting a second appeal to arrive, all is pointed at the tug of war being diluted in procedural timetables of the U.S. judiciary.
The question that arises, however, is if this verbal firing barrage is in fact hiding a different attitude by both sides. In the last ten days, representatives of the funds have signaled that they have discussed a way out having an official proposal. In parallel, the Executive made an agreement on the unpaid judgments in the ICSID, which include haircuts and payment with bonds. Together with this gesture for the U.S., key for unblocking loans from the World Bank, the hard speeches against the bondholders and the IMF have evaporated. The Argentine government adjusted its focus and put 2015 into view. It knows it needs to strengthen the inflow of dollars and to do so it is choosing pro-market recipes.
The expectation that animates companies and investors is that after the election, to deepen the model would be equivalent to following this new path in place of returning to the previous one.
AMBITO FINANCIERO: "New WB credits will contribute only US$700 million"
There are heavy maturities with the entity between 2014 and 2016. The reserves will suffer this week over the payment on the Bonar X.
by: Pablo Wende
The new agreement reached between Argentina and the World Bank will mean an inflow of fresh hard currency into the currency. But the US$3 billion that will arrive according to the new "strategic alliance" that the board of the multilateral organization will approve have to be taken with a grain of salt: not only is it an amount that will come in gradually as the projects advance, but the majority of it will only serve to compensate for the maturities on debt that Argentina must pay to the same institution between 2014 and 2016.
According to information put out by the Economy Ministry itself, maturities on principal with the WB are adding up to US$2 billion over the next three years (on average around US$650 million per year) and which one must add a little more than US$300 million in interest. As such, if all the payouts are made as agreed, there will be only US$700 million net left over on the local market in the next three years. It's an almost insignificant amount, even though it isn't unimportant, as access to international financing is being attempted. In fact, the WB - led by Jim Yong Kim- has been postponing approval of new credits for Argentina due to opposition by the American representative to the institution. They demand that the government honor the judgments against it at the ICSID, the arbitration tribunal of the World Bank.
According to a report released by the consulting firm Elypsis, until the end of 2015 the hard currency balance will increase by around US$400 million, which lightly increases the reserves balance that Cristina de Kirchner will leave behind.
In recent years, the balance with multilateral organizations has been neutral. That means that the payments that the government must make are seen only as compensated with new loans. The goal of the Casa Rosada is now to recover access to international financing, especially through the IADB, World Bank and Andean Development Corporation, which is by long term, low-interest credit. If the US$500 million that Argentina was obliged to pay five companies that won cases in the ICSID are taken from the new loans that will be granted by the institution, the net balance of the dollars that will enter the country is practically zero. There is still no formal announcement about the mechanism of payment, while it came out that it will be through bonds - Boden 2015 and Bonar X (coming due in 2017).
The reserves will take another hit this week, as the payment is coming on another debt interest maturity that will have a negative impact on the reserves. It is US$224 million on the Bonar X, which the government will have to pay by Thursday. It is expected that the reserves will drop by another US$150 million, at a minimum, by this payment alone.
On Friday last, the BCRA stock fell by US$100 million, to US$34.502 billion. And the gap is now close to rounding out to US$9 billion over the course of the year. Now the government is betting on the BAADE to capture dollars from companies that bring dollars in, as was negotiated with Bridas (US$500 million) and is on the verge of being agreed to with grain producers. However, it is not clear on what timetable the money will come in, but the government itself says that the process "will be gradual".
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