IMF Won't Back Argentina In Elliott Appeal

Jul 24 2013 | 11:59am ET

Argentina has lost a pair of powerful allies in its effort to thwart Elliott Management's effort to be paid in full on bonds the country defaulted on a decade ago.

The International Monetary Fund will not ask the U.S. Supreme Court to consider Argentina's appeal, following a similar decision by the Obama Administration. The U.S. government had previously weighed in on the matter in favor of Argentina's position that it cannot be forced to pay the holdouts.

A friend-of-the-court brief from the IMF would have been the first the organization ever filed with the U.S. Supreme Court.

Argentina is seeking to have lower-court decisions ordering it to pay the holdouts overturned. The country has vowed never to pay them, but the court rulings could force it to default on the restructured debt it issued in exchange for the defaulted debt in 2005 and 2010, exchanges which cost bondholders billions.

The IMF dropped its plan after the Obama administration urged it not to file the brief.

"The managing director's recommendation was premised on U.S. support, as it would not be appropriate for the IMF to file this brief without that support," the IMF said. "The fund remains deeply concerned about the broad systemic implications that the lower-court decisions could have for the debt restructuring process in general."

Argentina, which argues that the lower-court rulings violate its sovereign immunity, even though it issued the bonds in New York under U.S. law, has also argued that the lower-court rulings would severely hamper the international sovereign debt markets.

The Obama administration's decision to end its practice of supporting Argentina appears the result of U.S. unhappiness with the country's recent actions, including failures to pay creditor nations—among them the U.S.—and a recent IMF censure for failure to provide accurate information about inflation and economic growth.


In Depth

Q&A: George Schultze On His Fund's Unique Approach to Distressed Investing

Apr 16 2015 | 1:01am ET

George Schultze is a managing member of Schultze Asset Management, a long/short...

Lifestyle

Puerto Rico Woos The Rich But So Far Gains Little

Apr 17 2015 | 2:45am ET

Hedge fund manager Rob Rill grins. He has just had word that U.S. financial regulators...

Guest Contributor

Minnesota Supreme Court Rejects The Ponzi Scheme Presumption: Lenders Claw Back Some Of Their Own Rights

Apr 17 2015 | 9:23am ET

A recent court ruling in Minnesota has put an end to the Ponzi Scheme Presumption...

 

Editor's Note