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Judge holds Argentina in contempt of court for illegal attempts to circumvent rulings.

Summary: Argentina: 40,117,096 people in the 2010 census, 1,073,518 square miles of land, $404.483 billion estimated total GDP, and one major problem dealing with foreign creditors.

On ...

Argentina: 40,117,096 people in the 2010 census, 1,073,518 square miles of land, $404.483 billion estimated total GDP, and one major problem dealing with foreign creditors.

On Sept 29, U.S. District Judge Thomas Griesa held Argentina in contempt of court, saying that the country has made illegal attempts to get around his previous rulings. Argentina claims it cannot pay bondholders until it pays $1.6 billion to holdout creditors.

In order to get around the judge's ruling, Argentina recently passed legislation that would move jurisdiction of its bonds to Argentina rather than the U.S. Also, the country attempted to replace the trustee bank for the bonds -- BNY Mellon -- with an Argentine bank. Judge Griesa said both moves were grounds for contempt.

"[Argentina] has been and is now taking steps in an attempt to evade critical parts of" U.S. court order, Judge Griesa said, per the Wall Street Journal. "There's a very concrete proposal that would clearly violate the injunction."

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A lawyer representing Argentina at the ruling said that the contempt citation will "only make the situation worse." In addition, a letter signed by the U.S. ambassador to Argentina to U.S. Secretary of State John Kerry called the contempt citation a "legal absurdity."

The South American country has recently been embroiled in a battle with foreign hedge funds, primarily in the U.S., over restructured debt following a 2001 default. Some hedge funds would not accept the restructured debt, forcing Argentina to pay back more than $1.5 billion.

These "holdout" hedge funds have taken a number of actions against Argentina in order to recover money. Creditors attempted to seize the Presidential plane in 2007. Elliott Management Corp.'s NML Capital Ltd. impounded a navy vessel in 2012.

Argentina President Cristina Kirchner has called the hedge funds "vultures" and refused to pay without negotiations. However, the U.S. Supreme Court blocked an Argentine appeal in June 2014, and a U.S. district court allowed NML Capital Ltd. access to information to potentially seize assets from a Kirchner associate in August.

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Publication:Inside Counsel
Geographic Code:3ARGE
Date:Oct 1, 2014
Words:434
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