Thomas Griesa

Saturday, April 23, 2016

Argentina, the last episode of a controversial US judge

Argentina’s dispute with the “vulture” funds in United States courts was one of the longest in sovereign bond restructuring history, a 15-year litigation always managed by US District Judge Thomas Griesa.

The 86-year old judge reportedly told his closest associates months ago that he planned to retire when finishing the case, seeking to rest at his house in Montana and write his memoirs —probably including a chapter about Argentina. He is now facing severe health problems such as hearing and talking difficulties, health diseases and a hump that makes it difficult to walk.

Born in Kansas City in 1930, Griesa graduated from Harvard University and took a posgraduate course at Standford. He started working at the US judiciary in 1970 and was appointed as judge during the Nixon administration. In his long career Judge Griesa has ruled in cases involving a New York mobster, a Guatemalan drug dealer and a hotel company businesswoman accused of tax evasion.

For years Judge Griesa’s decisions were viewed as friendly to the Argentine government. But that changed abruptly in 2012, when he ruled that the country could not make payments on exchanged debt without also paying so-called holdouts bondholders who refused to participate in the earlier exchange deal. The decision surprised many and set Argentina on a collision course with investors.

Argentina refused to heed Griesa’s orders to pay the holdout hedge funds, led by NML and Aurelius, at the same time as it paid bondholders who participated in the debt swaps following the country’s 2001 default. That order came after the US Supreme Court declined to hear Argentina’s appeal of Griesa’s ruling and settlement talks went nowhere.

Former president Cristina Fernández de Kirchner wasn’t willing to pay the holdouts more than what was given to the creditors who entered into the 2005 and 2010 debt swaps. Negotiations were basically on hold until December 31, 2014 when the Rights Upon Future Offers (RUFO) clause expired. That clause prohibited Argentina from offering a better deal to those who rejected the 2005 and 2010 restructuring of defaulted debt

The end of the clause was followed by a set of meetings with former Economy minister Axel Kicillof in New York, but he failed to reach an agreement. Kicillof claimed that paying the “vultures” what they wanted would have had a severe economic effect. CFK’s Economy minister has now warned Macri over the consequences of the deal.

With 2015’s presidential election, candidates promised to settle the conflict in order to recover access to foreign currency, with Macri saying a settlement should be reached as quick as possible. Soon after his victory, Macri sent Finance Secretary Luis Caputo to meet with the holdouts in New York to reach a deal and put an end to the litigation — a goal achieved yesterday.

Herald staff