Argentina Seeks To Force Hedge Fund Holdouts To Take Deal

May 5 2010 | 10:52am ET

Argentina is mulling a way to end nearly 10 years of legal battles over its 2002 default on US$100 billion in debt.

The country, desperate to issue $1 billion in new bonds, is exploring a strategy that could force holdouts who refuse to accept its new US$18.3 billion debt swap to eventually relent if enough holders of the debt relent. Under the strategy, Argentina would ask a court to force holdouts to take the swap, Reuters reports.

“It’s about trying to ensure that minorities taking legal action automatically have to accept the majority’s decision,” Reuters’ source said.

Among those minorities are hedge funds Elliott Management and Aurelia Capital Partners, who in recent years have won asset freezes against Argentina institutions in the U.S. over the debt default. Last year, a federal judge actually held Argentina in contempt of court for failing to turn over documents to Aurelia.

Argentina’s economy minister said the country is confident that at least 60% of the current holdouts will accept that new deal.

That would reduce the country’s problem “to a small number of investors, those who seek an aggressive solution without consensus,” Amado Boudou said. “Argentina’s good faith will be perceived by the courts.”

In Depth

Related-Company Fees: Normal Industry Practice or Conflicted Compensation?

Nov 11 2015 | 4:23pm ET

Regulatory agencies as well as investors are increasingly exploring whether certain...


Ferrari Roars in Wall Street Debut

Oct 21 2015 | 4:28pm ET

Shares of supercar maker Ferrari jumped as much as 15 percent to a high of nearly...

Guest Contributor

Private Debt - What is the Opportunity?

Nov 11 2015 | 3:28pm ET

In this contributed article, Rob Allard, founding partner of Firebreak Capital...


Editor's Note

    Oct 21 2015 | 10:41am ET

    One of the most unique charity benefits in the hedge fund industry, A Leg To Stand On's (ALTSO's) Hedge Fund Rocktoberfest - NYC, raised nearly $500,000 last Thursday thanks to the generous support of major sponsors and nearly 1,400 attendees from the Tri-State finance, business and hedge fund communities. Read more…