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Holdouts: Judge Threatens to Hold Argentina in Contempt

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President Cristina Fernández de Kirchner addresses the UN General Assembly (photo Carreira Víctor/Telam)

President Cristina Fernández de Kirchner addresses the UN General Assembly (photo Carreira Víctor/Telam)

Judge Thomas Griesa has called for a new hearing on Monday in which Argentina must show cause and explain why the country should not be declared in contempt, following the decision not to pay the holdouts as his ruling ordered on 8th August. The new hearing comes at the request of one of the hedge funds involved in the litigation, dubbed “vulture funds”. NML Capital requested that the judge apply a US$50,000 daily fine on Argentina if it does not comply with the ruling.

In August, Judge Griesa denied a similar request to find Argentina in contempt of court on the ground that it would not help resolve the situation.

The original ruling stated that Argentina must pay the holdouts – led by so-called vulture funds – at the same time as it does those who accepted debt restructuring in 2005 and 2010, based on the “pari passu” clause of equal treatment.

After the US Supreme Court refused to revoke the order in June, Argentina fell into a ‘technical default’ on 30th July as Judge Griesa blocked banks from processing payments to its exchange bondholders.

Since then, the government has been seeking ways to circumvent the ruling, including approving new legislation to pay bondholders through the state-owned Banco Nación rather than the Bank of New York Mellon.

In the latest advance, yesterday the government approved the creation of the ‘Nación Fideicomiso’ (Trust) account at the Central Bank. The government will deposit US$200m into the account to cover the next payment to those who accepted restructured debts, which is due on 30th September.

The government dubbed the move evidence of the country’s “good faith and its willingness and ability to pay in equitable conditions”.

The developments come a day after President Cristina Fernández de Kirchner labelled the holdouts “terrorists” during her speech in the UN General Assembly.

“Terrorists are not just those who go around leaving bombs, but also those who provoke economic instability in a country,” she said, before adding that Argentina is “capable of paying, willing to pay, and will pay its debts despite the harassment of these vulture funds”.

“In the times of economic vultures and war hawks, we need more doves of peace,” added the president.

Fernández also called for support to open dialogue with the United Kingdom over the Falkland/Malvinas islands, and asked the Assembly to press for the creation of a Palestinian state.

Citigroup Appeal

In a separate hearing to be held on Friday, Judge Griesa will review a request for a stay issued by Citigroup to allow it to make payments to holders of bonds issued under Argentine law, due by 30th September.

Citigroup says that if it is not able to process payments it’s Argentina subsidiary could face civil and criminal sanctions.

Last week, a New York appeals court rejected Citigroup’s request, saying it did not have jurisdiction to rule on the issue and sending the case back to Judge Griesa.

The post Holdouts: Judge Threatens to Hold Argentina in Contempt appeared first on The Argentina Independent.


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