Elliott, Argentina Fight Heats Up

Nov 16 2012 | 11:22am ET

The battle between Elliott Associates and Argentina over the latter's decade-old default is intensifying, with action in four courtrooms around the world and at the Argentine navy ship impounded at Elliott's urging.

This week, Argentina officially petitioned for a rehearing of its case before the U.S. Second Circuit Court of Appeal in New York. Last month a three-judge panel of that court rejected Argentina's appeal of a lower-court ruling that bars the country from paying bondholders who accepted a haircut on the defaulted debt before those who, like Elliott affiliate NML Capital, refused the exchange.

The ruling was a sweeping victory for Elliott and immediately sent Argentine bonds tumbling for fear of another default. Argentina has vowed never to pay the holdouts in full, and if it should lose before the full Second Circuit and the U.S. Supreme Court, could be forced to default on the restructured debt.

Last week, that issue was heard in the same Manhattan courthouse, the two sides fought over a stay issued by the judge who made the recently-upheld ruling, U.S. District Judge Thomas Griesa. Griesa had stayed his ruling, which could force Argentina to pay Elliott $1.3 billion next month.

Griesa upheld the stay, and said it would remain in effect until Argentina exhausts its appeals. And he also waved off concerns from other hedge funds—those who own the restructured debt—that Elliott's fight is unfairly holding them "hostage."

Sean O'Shea, a lawyer for Gramercy Funds Management, complained, "All we want to do is get paid. We've already taken a severe haircut. How does it solve the problem by giving [Elliott] 100% out of our hide?"

"Talk to the Republic," Griesa told O'Shea, who said about 20 investors are considering an intervention in the case. "They can pay you." According to the New York Post, the Bank of New York Mellon, trustee for the bondholders, is also likely to intervene, as it could face legal action if it fails to make the bond payments.

Meanwhile, Argentina has filed suit against Ghana at a U.N. tribunal in an effort to get its navy flagship back. The vessel, the ARA Libertad, was impounded early last month after NML convinced a Ghanian judge that it had the right to seize the ship due to U.S. court rulings.

Argentina has argued that military vessels are not subject to seizure under international law and had threatened to take legal action against Ghana if the ship were not released by Tuesday. It wasn't, and Argentina has sought the assistance of the International Tribunal for the Law of the Sea in Hamburg, Germany.

"The Argentine government has presented a request for an injunction over the embargo ordered by a Ghanian judge that violates international law," Argentine Foreign Minister Hector Timerman said.

The move comes amidst a tense standoff over the Libertad. The boat has been moored at the port of Tema, near Ghana's capital, Accra, since the judge's order six weeks ago. The problem is, the ship is parked at one of Tema's most important berths, creating a traffic jam at the port.

The Ghana Ports and Harbours Authority won an order from Ghana's High Court allowing it to move the Libertad from berth 11 to end the "crippling disruptions" to the country's cement and steel industries. But the ship's skeleton crew—most of the 330 men on board were evacuated at the end of last month—have refused to move the ship without an order from Argentina. According to Ghana's Daily Guide, 10 heavily armed naval officers stood on the Libertad's deck while the GPHA sought to have the ship moved.

In retaliation, the GPHA has cut off power and water to the ship, which is now relying on generators.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Expert Says Scale Of Baillon Classic Car Find Rare

Dec 29 2014 | 3:40am ET

Forget about hedge funds, buying rare, classic cars could be called the ultimate...

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.