The bar that the Argentine Republic must reach for a settlement with a holdout bondholder group may become even higher now that a new crop of bondholders wants to piggyback on a judgment bolstering the rights of the dissidents.
At least 102 bondholders who took legal action separately from the holdout group are seeking the protection of the injunction that the holdouts received, and some 25 new lawsuits have been filed by these newly litigious bondholders that have $4.7 billion in claims since June 16, according to a letter dated Nov. 6 that Argentina's lawyer, Carmine D. Boccuzzi Jr. of Cleary Gottlieb Steen & Hamilton LLP, sent to the judge who gave the injuction to the holdout group.
A group of holdout bondholders led by NML Capital Ltd., a New York hedge fund affiliated with Elliott Management Corp., and fellow hedge fund Aurelius Capital Management LP, had originally declined to participate in Argentina's 2005 and 2010 debt swaps and litigated to get paid in full, protesting Argentina's practice of paying only its restructured bondholders.
Judge Thomas P. Griesa of the U.S. District Court for the Southern District of New York in Manhattan awarded that group a so-called ratable payment injunction, which prohibits Argentina from paying restructured bondholders without also paying the holdout group, which gives teeth to their claims.
Case in point: trustee Bank of New York Mellon isn't giving the restructured bondholders the interest payments that Argentina deposits for them, for fear of violating Griesa's order. Due to that impasse, Argentina defaulted on its sovereign debt on July 30 and Oct. 30.