New setback for Argentina: US authorisation to seize assets for debt of US$187 million from 2001

The judge Debra Ann Livingstonof the Second Circuit Court of Appeals in New York, confirmed the first instance ruling of Judge Loretta Preskaof the Southern District Court of that city, who allowed Argentina’s creditors to seize United States Treasury bonds that the country had in its possession.

In this way, the holders of bonds that defaulted 23 years ago They had a victory that would allow them to seize some US$187 millionThe case is a claim for securities used as collateral for payment of Brady bonds issued in early 1990 and due in March 2023.

Argentine assets in the US ordered to be seized following bondholders’ lawsuit

The news was announced by the market specialist Sebastian Maril, owner of the consulting firm Latam Advisors, who follows in detail the trials for Argentina’s defaulted debt. On his social network account “X” he shared an excerpt from the ruling in which the embargo orders against Argentina.

According to the ruling, the judge stated: “We confirm the seizure orders “We are unable to determine whether Argentina’s reversionary interests are protected by the Foreign Sovereign Immunities Act. Argentina used the interests in commercial activities in the United States, leaving them subject to seizure. And Argentina’s arguments that its seized assets are not subject to seizure under New York law have no merit, so we also affirm the surrender order.”

Furthermore, it indicates that The reasons for closing the case are “not convincing”for which reason he ordered the parties “to re-file their briefs and appendices within thirty days with strict redactions that comply with this Court Order“. Along these lines, he stated: “We affirm the district court’s orders, deny the motion to supplement the record, and grant the motion to limit the scope of the sealing.”

Investment funds’ claim for the 2001 defaulted debt

The funds Attestor Master Value, Trinity Investments and White Hawthorne, Bison Bee LLC and Bybrook Capital Master They bought Argentine debt in default since 2001 to holders who never entered the three exchanges that the country issued, in 2005 (under the management of Nestor Kirchner), 2010 (Cristina Kirchner) and 2016 (Mauricio Macri).

They are believed to be less than 3% of the total number of original holders who held the defaulted debt and they started a trial against the Argentine State, colloquially called holdouts either vulture funds. In total, the Argentina owes about US$420 million for the defaulted debt from 2001.

Are zero-coupon US Treasury bonds that Argentina had as collateral for payment of the Brady bonds which the country issued in the early 1990s, when it refinanced the debt accumulated in the previous decade, thanks to a benefits policy launched by the then US Treasury Secretary, Nicholas Brady.

If Argentina did not pay the interest on the Brady bonds, Creditors could collect on US Treasury bonds that were in a special account in the New York Federal Reserve. In 2005, these bonds were already part of an embargo when Argentina launched the swap for the defaulted debt from 2001. When the swap was reopened in 2010 and then in 2016, the holders of the Brady bonds exchanged their defaulted debt and released the pledge.

The specialist Maril He recounted the latest rulings that the Argentine State lost in recent weeks: “In just one month, the Argentina lost the appeal for the GDP coupon in London (US$1.5 billion); received summary judgment for defaulted debt (US$140 million); lost the certification of ICSID ruling in the USA in the case Argentine Airlines (US$340 million), and lost the Appeal for asset seizures sovereigns in the event of defaulted debt (US$420 million). I repeat, letting the courts speak is not a legal strategy, but an excuse for not having one.”