Appellate Relief for Argentina in Bond Scrap

     MANHATTAN (CN) – Stacking up a string of appellate victories for Argentina, the Second Circuit on Wednesday vacated a broad definition for bondholders suing the Latin American nation as a class for defaults related to its 2001 debt crisis.
     Argentina has long been embroiled in federal litigation here over its failure to pay for more than $80 billion in sovereign debt stacked up from its 14-year-old financial crisis.
     When the republic hammered out two restructuring deals in 2005 and 2010 that satisfied roughly 91 percent of bondholders, remaining bondholders filed a flurry of lawsuits.
     U.S. District Judge Thomas Griesa’s regular rulings in favor those bondholders have made him deeply unpopular in Buenos Aires.
     It was his expansion of the bondholder class that went before the Second Circuit for review Wednesday. The three-judge appellate panel opened their 10-decision by noting the difficulty in determining how much Argentina owes the holdouts.
     “Defining the precise class to which Argentina owes damages for its refusal to meet its bond payment obligations and calculating those damages have proven to be exasperating tasks,” Judge Richard Wesley wrote for the panel.
     Following a recent trend, the appellate court questioned the balance Griesa struck.
     In expanding the definition of a bondholder class last year, Griesa contradicted earlier instructions that the Second Circuit gave him to hold an evidentiary hearing regarding the size of the class and amount of damages, according to the ruling.
     Carmine Boccuzzi, an attorney for Argentina with the firm Cleary Gottlieb Steen & Hamilton said that he was “very pleased” with the court’s opinion.
     “The ruling makes clear that plaintiffs may not use the class mechanism to avoid having to prove the actual damages of purported class members,” Boccuzzi said in an email.
     Henry H. Brecher is the lead plaintiff suing Argentina. His attorney, Jason Zweig with Hagens Berman Sobol Shapiro, has not returned a request for comment.
     Wesley’s ruling follows two significant legal victories for Argentina that other panels of the same court handed down last month.
     On Aug. 10, the appellate court overturned Griesa’s definitions of a bondholder class in Puricelli v. Argentina.
     Weeks later, the appellate court ruled Argentina’s central bank had immunity from legal action by hedge funds owned by Republican billionaire Paul Singer, whose financial institutions are denounced by Argentina as “vulture funds” for buying Argentina’s distressed debt for pennies on the dollar during the economic crisis and then demanding the full value in court.

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