Argentina and creditors who accepted its debt restructuring following its 2002 default have appealed a court ruling that could force the country to default again.
The country and the exchange bondholders each filed motions with a federal appeals court in New York to reinstate a stay of a lower-court order that allowed Argentina to continue making payments on debt exchanged in 2005 and 2010 while it continued its fight with those who refused the exchange, including Elliott Associates and Aurelius Capital Management. The lower-court order requires Argentina to put more than US$1.3 billion in escrow to cover payments to the holdouts, whom Argentina has sworn never to pay.
U.S. District Judge Thomas Griesa lifted a stay he placed on his own ruling last week; he wrote, "the less time Argentina is given to devise means for evasion, the most assurance there is against such evasion."
Argentina, which has pledged to adhere to U.S. court rulings and which has said it will not default again, blasted Griesa's ruling, calling it a "kind of judicial colonialism." Argentine economy minister Hernán Lorenzino added that it was "an attack on sovereignty that shows ignorance of the laws passed by our Congress."
For their part, the exchange bondholders complained to the U.S. Second Circuit Court of Appeals, which last month upheld Griesa's underlying ruling, that lifting the stay "unlawfully and unconstitutionally burdens the rights of innocent creditors."
"The exchange bondholders agreed to take under 30 cents on the dollar to support Argentina's debt restructuring in accordance with U.S. government and international fiscal policy," David Boies, a lawyer for the creditors, said. "They should not be further penalized."