Citigroup argued before the hearing that it faces "a serious and imminent hazard" if it cannot process another interest payment by Argentina on US$8.4 billion in bonds the country issued under local laws following its 2002 default.

Thursday, September 18, 2014

New York Appeals Court promises Citi decision, criticises bank's case

New York's Second Circuit Appeals Court has heard the arguments of Citigroup, who seek to overturn a judicial order blocking the payment of Argentine bonds. The court also promised to release its decision 48 hours before the next payment deadline of September 30, although the comments from one of the judges cast doubt on the bank's posture. 

The audience began at 3pm local time in floor 17 of the courts, located at 40 Foley Square. Lawyers working on behalf of the nation, Citibank and the vulture funds were granted a total of 35 minutes to present their arguments. 

Citigroup argued before the hearing that it faces "a serious and imminent hazard" if it cannot process another interest payment by Argentina on US$8.4 billion in bonds the country issued under local laws following its 2002 default.

The three-judge panel of the 2nd US Circuit Court of Appeals in New York is weighing an appeal by the bank to reverse a lower court's injunction. That ruling bars payment to creditors who participated in two prior debt exchanges stemming from the default unless holdout creditors are paid at the same time.

Citigroup's lawyer, Karen Wagner, said the bank will "undoubtedly" get another transfer of money from Argentina by Sept. 30 and that local law requires it to make payments that are currently blocked by a lower court injunction. She later added the bank would "obey the order" of the appellate court if it upholds the injunction.

One judge, Barrington Parker, voiced skepticism over Citigroup's argument, saying: "I don't know how you can seriously argue the Argentine law bonds aren't covered by the injunction."

Roy Englert, a lawyer representing holdout creditors, argued that the injunction's definition of the bonds exchanged in 2005 and 2010 does not differentiate based upon on denomination or the law under which they were issued.