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Argentina fights US discovery case

Apr 21, 2014

Argentina, NML present arguments at US Supreme Court over asset discovery

     
     
   Source: Ryan Kelly  
In the latest episode of Argentina’s fight with bondholders over its 2002 default, the US Supreme Court heard arguments on Monday over discovery of the sovereign’s assets in the US.

If the court rules against Argentina, the country would be obliged to disclose the assets it holds in the US. That could pave the way for the confiscation of those assets to pay holdout creditors led by NML Capital.

The court hearing comes amid indications that the sovereign is seeking to normalize relations with global investors. Argentina has reached a settlement with Repsol over the nationalization of YPF and opened discussions with the Paris Club of international creditors. It has also borrowed in the local market and banks globally have even pitched financing deals to the sovereign.

The American Task Force Argentina (ATFA), a lobby group representing US institutions including holdout hedge fund Elliott Associates, on Monday said it expected the Supreme Court rule against Argentina in the discovery case.

"The proceedings today can only be seen as a disaster for Argentina," said Richard Samp, chief counsel at the Washington Legal Foundation during a teleconference organized by ATFA. "There is no question that the court is going to rule against Argentina’s argument that it should not be subject to post-judgment discovery." Samp said he expected eight out of nine justices would vote against Argentina and that a decision was likely to come before the end of June.

He also said that several of the justices presiding over the hearing on Monday indicated that they were in favor of permitting the discovery of Argentine assets outside the US, too.

The case — Republic of Argentina v. NML Capital — is separate from a Pari Passu case, which the Supreme Court is considering whether to accept. The Pari Passu case centers on holdouts’ claim that Argentina cannot only service exchanged debt, but must also service outstanding instruments. LF



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