News / Americas

    US Judge Calls Argentina Debt-Swap Plan 'Illegal'

    Carmine Boccuzzi, foreground left, a lawyer representing Argentina, leaves Federal court after a hearing, in New York, Aug. 21, 2014.
    Carmine Boccuzzi, foreground left, a lawyer representing Argentina, leaves Federal court after a hearing, in New York, Aug. 21, 2014.
    Reuters

    U.S. District Judge Thomas Griesa on Thursday called Argentina's proposed debt restructuring plan “illegal” but stopped short of holding the country in contempt, saying that would not help resolve the dispute that led to the nation's second default in a dozen years.

    Griesa said proposed legislation announced on Tuesday by President Cristina Fernandez would violate orders he imposed favoring creditors who refused to accept restructured bonds following the country's 2002 default on $100 billion in debt.

    “It is illegal, and the court directs that it cannot be carried out,” Griesa said at a hearing in New York.

    But the judge declined to hold Argentina in contempt despite the urging of the two leading holdout creditors, saying such a finding would not “add anything to the scales” to encourage a settlement.

    Argentina missed a June interest payment after Griesa blocked payments owed to holders of debt issued under U.S. law that was restructured in 2005 and 2010.

    Fernandez, steadfast in her refusal to pay the hedge funds face value on their bonds, this week sent to the Argentine Congress a bill that would allow her government to resume payment to holders of exchanged bonds in defiance of Griesa's court.

    The proposal prompted lawyers for Elliott Management Corp's NML Capital Ltd. and Aurelius Capital Management, the leading bondholders suing for payment after not participating in the country's restructurings, to seek a contempt finding.

    “I firmly believe there will not be a settlement until it becomes crystal clear to the Republic of Argentina that its efforts to evade will not be countenanced,” said Edward Friedman, a lawyer for Aurelius.

    But Carmine Boccuzzi, a U.S. lawyer for Argentina who said his firm Cleary Gottlieb Steen & Hamilton only learned about the proposal Tuesday night, said a contempt order would not help forge a deal, adding the proposal was not even a law yet.

    “A finding of contempt would be only further gasoline on the fire,” he said.

    Typically, U.S. courts can impose prison or fines as part of a contempt order. With prison not an option, Argentina could face stiff fines for failing to comply with Griesa's orders, legal experts said.

    They said even if Griesa were eventually to issue a contempt order, it would be unlikely to have much practical impact on a country that has already shown itself willing to defy his rulings.

    “It's largely in the realm of the symbolic,” said Chimene Keitner, a law professor at the University of California in Hastings.

    Griesa's finding that the legislation was a violation of his orders followed past rulings he had made when Argentine officials made similar proposals for debt swap proposals.

    During the 2005 and 2010 restructurings, holders of about 93 percent of Argentina's debt agreed to swap their bonds in deals giving them 25 cents to 29 cents on the dollar. Bondholders who did not participate including NML and Aurelius then turned to the courts seeking payment in full.

    In 2012, Griesa ordered Argentina to pay the holdouts $1.33 billion plus interest the next time it made a payment to holders of the exchanged bonds. A federal appeals court later upheld the ruling, and the U.S. Supreme Court declined to review it in June.

    After the Supreme Court's decision, Griesa in June blocked a $539 million interest payment on the restructured debt deposited by Argentina at intermediary Bank of New York Mellon, saying it violated his order. Those funds are still held in limbo in BNY Mellon's account.

    Latin America's number three economy then tipped into default on an estimated $29 billion in debt when negotiations with the New York hedge funds collapsed.

    The president's bill would make state-controlled bank Banco Nacion the intermediary for bondholder payments instead of BNY. The legislation is likely to be enacted by Congress because Fernandez's backers hold a majority in both chambers.

    Argentina has accused the judge of overstepping his bounds and siding with the holdouts and said any contempt charge would have no consequences for a sovereign power.

    Argentina's discount bonds due 2033 were off 0.43 point in price to bid 80.29 points, with a yield of 11.06 percent, registering little movement on Griesa's decision. The Par notes maturing in 2038 were bid up 0.67 point in price to 49.35, yielding 8.97 percent, according to Thomson Reuters data.  

    You May Like

    S. African Farmer Goes From 'Voice in the Wilderness' to Sought-After Expert

    Margarest Roberts has authored more than 40 books on subjects like organic farming, urban agriculture, herbs and ‘superfoods'

    Millennial Men Prefer Bucks Over Beauty

    U.S. men aged 18 to 34 say the finances of a potential significant other are more important than her looks

    Multimedia Lebanese Clown Troupe Marks Valentine's Day Amid Stink

    Activists resort to unusual approaches to raise public awareness of country’s ongoing trash crisis

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growthi
    X
    February 10, 2016 5:54 AM
    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growth

    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Civil Rights Pioneer Remembers Struggle for Voting Rights

    February is Black History Month in the United States. The annual, month-long national observance pays tribute to important people and events that shaped the history of African Americans. VOA's Chris Simkins reports how one man fought against discrimination to help millions of blacks obtain the right to vote
    Video

    Video Jordanian Theater Group Stages Anti-Terrorism Message

    The lure of the self-styled “Islamic State” has many parents worried about their children who may be susceptible to the organization’s online propaganda. Dozens of Muslim communities in the Middle East are fighting back -- giving young adults alternatives to violence. One group in Jordan is using dramatic expression a send a family message. Mideast Broadcasting Network correspondent Haider Al Abdali shared this report with VOA. It’s narrated by Bronwyn Benito
    Video

    Video Migrant Crisis Fuels Debate Over Britain’s Future in EU

    The migrant crisis in Europe is fueling the debate in Britain ahead of a referendum on staying in the European Union that may be held this year. Prime Minister David Cameron warns that leaving the EU could lead to thousands more migrants arriving in the country. Meanwhile, tension is rising in Calais, France, where thousands of migrants are living in squalid camps. VOA's Henry Ridgwell reports.
    Video

    Video Valentine's Day Stinks for Lebanese Clowns

    This weekend, on Valentine's Day in Lebanon, love is not the only thing in the air. More than half a year after the country's trash crisis began, the stink of uncollected garbage remains on the streets. Step forward "Clown Me In," a group of clowns who use their skills for activism. Before the most romantic day of the year the clowns have released their unusual take on love in Lebanon -- in a bid to keep the pressure up and get the trash off the streets. John Owens reports from Beirut.
    Video

    Video Families Flee Aleppo for Kurdish Regions in Syria

    Not all who flee the fighting in Aleppo are trying to cross the border into Turkey. A VOA reporter caught up with several families heading for Kurdish-held areas of northern Syria.
    Video

    Video Rocky Year Ahead for Nigeria Amid Oil Price Crash

    The global fall in the price of oil has rattled the economies of many petroleum exporters, and Africa’s oil king Nigeria is no exception. As Chris Stein reports from Lagos, analysts are predicting a rough year ahead for the continent’s top producer of crude.
    Video

    Video 'No Means No' Program Targets Sexual Violence in Kenya

    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video Chocolate Lovers Get a Sweet History Lesson

    Observed in many countries around the world, Valentine’s Day is sometimes celebrated with chocolate festivals. But at a festival near Washington, the visitors experience a bit more than a sugar rush. They go on a sweet journey through history. VOA’s June Soh takes us to the festival.
    Video

    Video 'Smart' Bandages Could Heal Wounds More Quickly

    Simple bandages are usually seen as the first line of attack in healing small to moderate wounds and burns. But scientists say new synthetic materials with embedded microsensors could turn bandages into a much more valuable tool for emergency physicians. VOA’s George Putic reports.
    Video

    Video Researchers Use 3-D Printer to Produce Transplantable Body Parts

    Human organ transplants have become fairly common around the world in the past few decades. Researchers at various universities are coordinating their efforts to find solutions -- including teams at the University of Pennsylvania and Rice University in Houston that are experimenting with a 3-D printer -- to make blood vessels and other structures for implant. As VOA’s Greg Flakus reports from Houston, they are also using these artificial body parts to seek ways of defeating cancerous tumors.
    Video

    Video Helping the Blind 'See' Great Art

    There are 285 million blind and visually impaired people in the world who are unable to enjoy visual art at a museum. One New York photographer is trying to fix this situation by making tangible copies of the world’s masterpieces. VOA correspondent Victoria Kupchinetsky was there as visually impaired people got a feel for great art. Joy Wagner narrates her report.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.

    More Americas News

    In Cuba, Racial Inequality Deepens With Tourism Boom

    As capitalism creeps in more than 60 years after revolution that promised social equality, local residents, analysts concerned about gap between haves and have nots

    Video WFP: 3.6 Million Haitians Face Food Insecurity

    Half of Haiti's population works in agriculture; Around 75 percent live on less than $2 per day

    Video Olympics Technology Center Getting Ready for 2016 Games

    This year, the whole system will be cloud-based, enabling millions of fans around the world instant access to relevant information about the competition

    Red Cross Scales Up Community Action to Combat Zika

    ICRCS is mobilizing its large volunteer force in affected communities to help them clear up trash and areas where mosquitoes can breed

    Haiti's Prime Minister Calls for Peace on 1st Day Without President

    Evans Paul urges Haitian protesters to end weeks of sometimes violent street marches and join a dialogue to create a transitional government

    Social Media Erupts in Support of Sikh Man Barred from Flight

    Waris Ahluwalia says he was barred from boarding a flight from Mexico City to New York because he refused to remove his turban