COLUMN-Holdout investors urge DOJ not to back Argentina in bond appeal: Frankel
(The opinions expressed here are those of the author, a columnist for Reuters.)
By Alison Frankel
March 23 (Reuters) - Lawyers for three bondholder groups that have not reached settlements with Argentina sent letters this week to the U.S. Justice Department, arguing that the U.S. government should not reenter long-running litigation over defaulted Argentine sovereign debt.
The bondholder letters, sent by Milberg, Proskauer Rose and McDermott Will & Emery, allege that Argentina has refused to negotiate with small investors who collectively hold nearly $1 billion in defaulted bonds, despite recently reaching agreements with the majority of bondholders who declined to participate in previous sovereign debt restructurings, including the hedge funds NML Capital and Aurelius Capital.
As the bondholders' letters to the Justice Department explained, the 2nd U.S. Circuit Court of Appeals will soon to hear arguments on whether to lift the pari passu, or equal footing, injunctions that pushed Argentina into settlement talks with other investors.
The holdouts said that without the leverage of the pari passu injunctions - which barred Argentina from making payments to exchange bondholders before it paid bondholders holding defaulted debt - they will be forced to swallow an unpalatable take-it-or-leave-it proposal from Argentina. They urged the U.S. government not to file an amicus brief backing Argentina's position.
"Please do not endanger, for political or diplomatic reasons, my clients' ability to obtain fair recoveries through the normal litigation process," wrote Michael Spencer of Milberg, whose letter said he represents a group of bondholders holding defaulted Argentine bonds with a face value of more than $860 million.
"Please let the 2nd Circuit decide these appeals on their legal merits. Please do not let this become another example of wealthy and powerful interests (hedge funds and governments) obtaining favored treatment, while average people are passed by."
Lawyers for the protesting bondholder groups said they sent the letters after another plaintiff in the case told them that Argentine officials had asked the U.S. government to submit an amicus brief to the 2nd Circuit. Continuación...