November 6, 2014 8:30 pm
UK High Court court wades into Argentina’s debt crisis
A UK court has waded into Argentina’s debt crisis, giving hope to investors seeking to recover millions of euros in interest payments frozen by US courts.
In its first public comments on the case, the High Court in London indicated on Thursday that the payments fell under its domain because the euro-denominated Argentine bonds were issued under English law.
If the High Court makes a formal declaration to this effect, it could open the way for Argentina’s creditors – including George Soros’s Quantum Partners and Kyle Bass’s Hayman Capital Management – to receive Argentine funds currently locked in a Bank of New York Mellon trustee account.
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Those funds have been frozen on the instructions of a New York court, which ordered that the bondholders should not receive payment until the country paid back debt it defaulted on in 2001. The hedge funds, which are owed €226m, have been seeking to challenge this, citing the English law.
Christopher Clark, US counsel to the euro bondholders, said he was pleased that the British judge had recognised that the issue of payment was an English law question.
Judge Guy Newey of the High Court said he would delay ruling until mid-December in order to give those investors seeking repayment from the 2001 default – which benefited from the New York court’s decision – a chance to challenge. Such holdout investors include NML Capital, a subsidiary of Paul Singer’s Elliott Capital Management.
Since Argentina’s latest default in July, triggered by a New York judge’s ruling that holdouts must be paid in full, NML has hunted for Argentine sovereign assets around the world to claim as repayment.
The hedge fund has attempted to seize a naval training vessel, among other state assets. It recently sought an emergency court order to prevent Guido Forcieri, an Argentine lawyer and outgoing World Bank representative, from leaving the US in order to answer questions about assets that could potentially be seized.
Mr Forcieri is a close associate of Amado Boudou, Argentina’s vice-president, who was indicted in June by an Argentine federal court on corruption charges. These could result in the state confiscating any assets deemed to have been gained by corrupt means if he is found guilty – money that NML could then attempt to claim.
Legal experts say another element of NML’s strategy is to put pressure on Argentina to pay by highlighting alleged corruption at the highest levels of government.
A new group of holdout investors – referred to by some observers as the “me-toos” – is also beginning to emerge, threatening to complicate the situation further. They have refused to accept the terms of Argentina’s debt restructurings but have not won court orders to be paid in full like NML.
The 14 funds that US district judge Thomas Griesa has so far allowed to join NML’s group of holdouts in the negotiations, which include Ken Dart’s EM Ltd, hold claims worth around $1.2bn out of a total of some $10bn of potential claims.
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