COLUMN-Will contempt sanctions get Argentina to yield?: Frankel
(The opinions expressed here are those of Alison Frankel, a columnist for Reuters.)
By Alison Frankel
NEW YORK (Reuters) - Argentina's contempt for the U.S. court system is not even debatable. Argentine officials have openly jeered at court orders enjoining them from making payments to bondholders who participated in Argentine sovereign debt restructurings without also paying more than $1.5 billion to hedge funds that hold defaulted bonds.
Argentina has run newspaper ads vowing not to capitulate, has attempted to bring an action against the United States at the International Court of Justice in The Hague and, most recently, pushed through legislation authorizing its government to replace BNY Mellon with a state-controlled bank in Buenos Aires as the exchange bond trustee, after BNY Mellon made clear that it would not process payments for fear of violating the U.S. injunctions.
Contempt, as it's ordinarily defined, practically drips from the words of Argentine politicians when they talk about U.S. District Judge Thomas Griesa of Manhattan, who has presided over their standoff with the holdout hedge funds for nearly a decade.
Those funds, led by NML Capital and Aurelius Capital, asked Griesa on Wednesday to make Argentina's contempt official. They filed a motion to hold the government in contempt and impose sanctions on it. Griesa has scheduled a hearing Monday on the motion.
This isn't the first time that the funds have proposed a contempt finding after the U.S. Supreme Court refused in June to review the injunctions requiring Argentina to pay them.
So far, Griesa has delivered plenty of stern warnings to Argentina, via its lawyers at Cleary Gottlieb Steen & Hamilton, but hasn't held the government in contempt, presumably in the hopes that court-ordered mediation would produce a settlement.
The hedge funds' new motion argues that Griesa's admonitions haven't worked. Argentina has only cemented its defiance with the new legislation and followup newspaper ads billed as legal notices of its demand for BNY Mellon's resignation as exchange bond trustee. Continuación...