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.