Court Puts Argentina Payment To Elliott On Hold

Nov 29 2012 | 1:29pm ET

Just weeks before facing the unpleasant choices of paying the hedge funds it calls "vultures" or defaulting for the second time in a decade, Argentina has won a crucial reprieve.

The same federal appeals court that last month upheld a ruling that requires Argentina to pay holdouts from its debt restructuring, led by hedge funds Elliott Associates and Aurelius Capital Management, reinstated a stay on that ruling that a lower-court judge junked last week. The reprieve, even if it is temporary, means that Argentina will not default on its exchanged debt next month. Its next payment after that is not due until March.

The U.S. Second Circuit Court of Appeals scheduled a hearing for Feb. 27 on the matter. Argentina had asked the court to stay the ruling until it exhausts its appeals, which could feature a rehearing by the full Second Circuit—a three-judge panel of that body rejected Argentina's first appeal in October—or a hearing before the U.S. Supreme Court.

A stay was also pushed for by Argentina's exchange bondholders. While Argentina had no comment on the ruling, a lawyer for its creditors said that the decision "signals [the court's] understanding of the serious constitutional and equitable issues at stake."

The ruling is a blow for Elliott and the holdouts; U.S. District Judge Thomas Griesa had ordered Argentina to pay $1.3 billion into an escrow account to cover payments due them on the defaulted debt. Griesa also signaled that he had run out of patience for Argentina, writing, "the less time Argentina is given to devise means for evasion, the most assurance there is against such evasion."


In Depth

Q&A: TCA Fund Management's Bob Press on Small-Cap Private Equity

Aug 25 2016 | 8:55pm ET

The emergence of private credit as a replacement for traditional bank financing...

Lifestyle

Kiawah: Island Reversal

Aug 24 2016 | 9:59pm ET

Looking for real estate investments but the typical real estate fare isn’t cutting...

Guest Contributor

Old Hill Partners: Embrace Illiquidity

Aug 9 2016 | 2:39pm ET

The age-old financial concept that higher yields are the result of higher risk and...