In an unprecedented move, the International Monetary Fund plans to ask the US Supreme Court to review Argentina’s case in a decade-old legal battle with holdout creditors, because of the implications it could have on sovereign debt restructurings.
Argentina is seeking to void an October 2012 ruling by the 2nd US Circuit Court of Appeals in New York that found it had violated a clause in its sovereign bond documents, known as pari passu, and requiring it to treat all creditors equally.
In a letter sent to the holdout investors on Tuesday, IMF Managing Director Christine Lagarde informed the plaintiffs of her intention to recommend to the executive board that the fund file the amicus curiae, or friend-of-the-court brief, by the July 26th deadline, advocates for the holdouts said on Wednesday.
«The Managing Director of the IMF will be recommending to the Fund’s executive board that the Fund file an amicus curiae brief in support of the petition for a writ of certiorari in the case of Argentina vs. NML Capital,» the letter said, according to the American Task Force Argentina (AFTA).
The IMF has never before filed a brief to the U.S. Supreme Court.
The letter was sent to the plaintiffs, including NML Capital, a unit of billionaire hedge fund manager Paul Singer’s Elliott Management, and Aurelius Capital Management. Members of AFTA, which advocates for a better settlement to the default, include holdout investors.
When contacted on Wednesday by the Herald, a representative of the AFTA refused to comment on the latest developments.
The 2nd Circuit has yet to rule on whether to uphold U.S. District Judge Thomas Griesa’s order last November that Argentina pay holdout bondholders $1.33 billion.
The Supreme Court is on its summer break and won’t decide whether to hear the case until the fall.
Over the last decade, holdout investors and Argentina have sparred in the U.S. courts over the South American country’s $100 billion default in 2002.
Source: Buenos Aires Herald