By Nate Raymond
NEW YORK, Dec 13 (Reuters) - The U.S. government moved to
support Argentina on Thursday in its bid to sway an appeals
court to reconsider a ruling that would force the country to pay
"holdout" creditors owning bonds in default since 2002.
In October, the 2nd U.S. Circuit Court of Appeals in New
York upheld a lower court's decision finding that Argentina
violated a bond provision requiring it to treat all creditors
equally when it refused to pay the holdouts.
The South American country has asked for a rehearing with
the appeals court on this case.
On Thursday, lawyers for the U.S. government filed a motion
requesting that the 2nd Circuit allow them time to consider
whether to file a friend-of-the-court brief backing Argentina's
petition for a rehearing of their case.
"Any such filing would require approval by the Solicitor
General of the United States," the U.S. attorneys wrote, adding
that if granted they would do so by Dec. 28th.
Argentina defaulted on some $100 billion in sovereign debt
during a crippling 2001-02 economic crisis. About 93 percent of
bondholders accepted the country's 2005 and 2010 restructurings,
but holdout investors sued for full repayment on their defaulted
The appeals court ruled that Argentina must pay the holdouts
at the same time it pays the exchange bondholders. The decision
surprised many investors and sent Argentine bond prices
plummeting as fears of another default emerged.
U.S. government lawyers reiterated their position that the
court's interpretation of the "equal treatment" clause in
Argentina's defaulted bonds "may adversely affect future
voluntary sovereign debt restructurings, the stability of
international financial markets, and the repayment of loans
extended by international financial institutions."
The U.S. government argued this point in April with an
amicus brief when Argentina first appealed the original court
orders made by U.S. District Court Judge Thomas Griesa in
The holdouts who stand to benefit in this case include
Elliott Management's NML Capital Ltd and the Aurelius Capital
Management funds. Both declined to comment on the U.S. motion.
Last month, Griesa ordered Argentina to deposit $1.33
billion in escrow by Dec. 15, when the country was scheduled to
make a roughly $3 billion payment to the bondholders who
participated in the debt exchanges.
The 2nd Circuit halted his orders a week later, however, and
set out an appeals timetable through late February.
Separately on Thursday, the 2nd Circuit granted a motion by
a group of exchange bondholders - including Gramercy Funds
Management LLC - to consolidate their appeal of Griesa's
November order with Argentina's bid for a rehearing of the 2nd
Circuit's October decision.
The case is NML Capital Ltd et al v. Argentina, 2nd U.S.
Circuit Court of Appeals, No. 12-105.
(Additional reporting by Daniel Bases)
Follow us on Twitter @ReutersLegal | Like us on Facebook