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Argentine arbiter in debt talks shoots back at bondholder claims

March 16, 2016 9:57 am

Argentine arbiter in debt talks shoots back at bondholder claims

U.S.-court appointed mediator Daniel Pollack speaks at a news conference in the Manhattan borough of New York City, February 29, 2016 to announce that Argentina and its main holdout creditors have signed an agreement in principle to settle a sovereign debt default dispute. REUTERS/Mike Segar©Reuters
Daniel Pollack
The court-appointed arbiter in Argentina’s debt negotiations has dismissed a bondholder’s call for his removal, in a stinging response in which he argues that his work to settle the 15-year feud has brought “order out of chaos”.
Mohammad Ladjevardian, saying he represented a group with more than $27m of claims, filed a motion on March 11 to remove “special master” Daniel Pollack.
He argued that Mr Pollack had blocked smaller bondholders’ representatives from discussions, publicly endorsed Argentina’s offers, and used “pressure tactics” to force bondholders to accept the settlement.
The motion — addressed to Judge Thomas Griesa, who appointed Mr Pollack — could disrupt Argentina’s fragile settlement with bondholders, weeks after the country agreed to pay $4.6bn to Paul Singer’s Elliott Management and three other large “holdout” hedge funds, which refused to accept debt restructuring offers after the country’s 2001 default. In turn, the funds agreed to drop lawsuits and allow Argentina to access international debt markets — a major part of reforms that President Mauricio Macri has promised to fix the economy.
“It certainly is like a hand grenade thrown into the middle of things,” one person close to the situation said of Mr Ladjevardian’s motion.
But Mr Pollack shot back on Tuesday, calling Mr Ladjevardian’s claims “utterly baseless”.
“I brought order out of chaos and Mr Ladjevardian is the beneficiary of that work,” he said, adding that most bondholders had expressed appreciation for ”the intensity of my efforts and my fair-mindedness”.
“There never would have been the vast settlements that have taken place had there been in the room the several thousand creditors who held defaulted bonds, including Mr Ladjevardian,” Mr Pollack wrote in a statement emailed to reporters.
“Normally, all dealings with the special master are cloaked with confidentiality, but since Mr Ladjevardian has chosen to breach that ground rule, he leaves me no choice but to respond and set the record straight,” he wrote, enumerating an 18-point account of his communications with Mr Ladjevardian and related parties, adding emphasis in red, bold, and italics.

In response to Mr Ladjevardian, Mr Pollack said: “Like most people in life, I do not respond well to rudeness or threats.”
Like most people in life, I do not respond well to rudeness or threats
- Daniel Pollack
“Should Judge Griesa desire any further particulars of my work, I will respond in court,” he added.
Bondholders have taken a range of haircuts on their claims in order to settle with Argentina, with Elliott’s NML Capital accepting three-quarters of its total claim, comprising original debt plus years of postdated interest. The accord with NML specifically mentions Mr Pollack’s role and sets a deadline for the cash payments of April 14.
Many creditors, however, feel they were forced to settle before a February 29 deadline set by Judge Griesa and that Mr Pollack has helped Argentina rather than being an impartial party.
It’s the last resort to get the court’s attention to, please, help us
- Jessica Sleater, representing Mohammad Ladjevardian
“It’s not just Mohammad and how he’s been treated,” said Jessica Sleater of law firm Andersen Sleater, who represents Mr Ladjevardian. “There’s a lot of pushback — that’s why the funds that have settled are even in support of it, because they feel they were pushed into the situation by the special master.”
“It’s a highly unusual motion to bring, but it’s also a highly unusual situation,” she added. “It’s the last resort to get the court’s attention to, please, help us.”
Mr Ladjevardian’s motion was filed by attorneys including Bruce Hart, who worked for hedge fund Greylock, another Argentina bondholder.
NML is also appealing Judge Greisa’s move to lift injunctions preventing Argentina from paying other creditors ahead of the holdouts, which had effectively blocked the country from international capital markets, and had served as negotiating leverage for bondholders.
Marcelo Etchebarne, an Argentine lawyer in New York, expressed doubt that Mr Ladjevardian’s motion would succeed.
“Pollack saved the day in the eyes of the court, and is not going anywhere until this is over,” he said.
He added, however, that several plaintiffs had complained to the court that Argentina had treated those able to negotiate face to face more favourably.
“People within a class on any restructuring should get the same treatment, particularly when dealing with a sovereign,” he said. “If the accusations are true then the practice is illegal under Argentine law unless Congress ratifies all contracts.”

Additional reporting by Benedict Mander in Buenos Aires and Joseph Cotterill in London

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