By Nate Raymond
NEW YORK, Jan 10 (Reuters) - A U.S. appeals court on
Thursday declined to ask New York state's top court to rule on
the interpretation of a contract provision at the heart of
litigation over Argentina's defaulted bonds.
Bondholders who participated in restructurings of
Argentina's debt following its 2001 default had asked that the
case be sent to the New York Court of Appeals to have it issue
an opinion on the meaning of a clause requiring the equal
treatment of bondholders.
But the 2nd U.S. Circuit Court of Appeals in New York in a
brief order denied the request. It did not give a reason.
Sean O'Shea, a lawyer for the exchange bondholders, in a
statement said Thursday's ruling didn't affect his clients'
"core arguments" in a pending appeal of an order by U.S.
District Judge Thomas Griesa in November that Argentina pay
$1.33 billion into escrow for the holdouts.
The 2nd Circuit was expected to decide later this year
whether Argentina must pay $1.33 billion to bondholders who did
not participate in two restructurings of the country's debt in
2005 and 2010 following its $100 billion default 12 years ago.
Around 92 percent of the bonds were restructured, with
investors getting between 25 cents and 29 cents on the dollar.
But holdout bondholders, including Elliot Management Corp
affiliate NML Capital Ltd and the Aurelius Capital Management
funds, went to court seeking to paid the full amount. Argentina
has called these investors "vultures" and has fought against
payment.
In October, a three-judge panel of the 2nd Circuit ruled
that Argentina had violated a contract provision requiring it to
treat creditors equally by paying the exchange bondholders and
not the holdouts.
A group of exchange boldholders including Gramercy Financial
Group LLC last month asked the 2nd Circuit to send the case to
New York's highest court, the New York Court of Appeals, in
order to consider the meaning of the so-called "pari passu," or
equal treatment, clause, which is interpreted under New York
state law.
Federal appeals courts sometimes ask the top courts in
states to address questions arising out of state rather than
federal law.
Sean O'Shea, a lawyer for the exchange bondholders, in a
statement said Thursday's ruling didn't affect his clients'
"core arguments" in a pending appeal of an order by U.S.
District Judge Thomas Griesa in November that Argentina pay
$1.33 billion into escrow for the holdouts.
Oral arguments at the 2nd Circuit on that appeal is
scheduled for Feb. 27.
Spokesmen for NML and Aurelius declined comment.
The case is NML Capital Ltd et al v. Argentina, 2nd U.S.
Circuit Court of Appeals, No. 12-105.
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