Argentina Scores Victory Over Angry Bondholders

     MANHATTAN (CN) – Argentine bondholders experienced a setback in their fight for compensation over the country’s 2001 debt default, as the Second Circuit reduced the republic’s liabilities on Monday.
     The unanimous ruling slaps presiding U.S. District Judge Thomas Griesa on the wrist for ignoring the appellate court’s previous instructions, twice.
     Griesa, an 84-year-old jurist, has frequently been at odds with Argentina over cases stemming from the country’s default on up to $100 million in debt 14 years ago.
     This rocky relationship hit a nadir in a case filed by New York-based companies NML Capital and Aurelius Capital Management, which have been denounced by their as critics “vulture funds” for gobbling up the distressed debt of poor countries for pennies on the dollar, and then suing for the full amount.
     U.S. courts, however, have routinely ruled in favor of the hedge funds.
     Griesa, in particular, has denounced Argentina as “lawless” for refusing to pay up. After he ruled in favor of the New York-based firms, he was lampooned on the streets of Buenos Aires in posters that showed his head superimposed on the body of a vulture.
     Well before that case made headlines, eight class action lawsuits filed by individual bondholders against Argentina wound their way through the dockets of the same courthouse, before the same judge, over the same debt, to much less fanfare.
     Argentina does not dispute owing money to the bondholders in these cases; the controversy has always been over how much the country owes, and how those figures are determined.
     Unlike in the hedge funds case, Argentina has successfully challenged Griesa’s rulings favoring the bondholders on appeal.
     U.S. Circuit Judge Chester Straub recounted this history in the sharply worded opening paragraph of his ruling.
     “After previous panels of this court twice vacated aggregate judgments entered by the district court in favor of plaintiff classes, we remanded with specific instructions,” he wrote. “Rather than follow our instructions, the district court certified expanded plaintiff classes.”
     When a prior panel heard the case, the Second Circuit ordered Griesa to hold an evidentiary hearing to calculate damages though an “individual approach” if an “aggregate approach” were not possible, according to the opinion.
     After bondholders complained about the “legal and logistical pitfalls” of such a hearing, Griesa expanded the definitions of the class certification as an alternative.
     Straub said that this contradicted the court’s “clear” directive.
     Attorney Carmine Boccuzzi, who represents Argentina for the Manhattan-based firm Cleary Gottlieb Stein & Hamilton LLP, said his client is “pleased” with the ruling.
     “Plaintiffs have repeatedly failed to prove their alleged damages and are not entitled to the overstated judgments they have twice before demanded and that the Second Circuit has clearly said are improper,” he added.
     An attorney for the bondholders declined to comment on the ruling.

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