Cross-posted at WLF’s Forbes.com contributor site
Argentina is rapidly running out of options in its efforts to overturn court decisions requiring it to meet its contractual obligation to treat its bondholders equally.
In June 2013, Argentina filed a certiorari petition with the U.S. Supreme Court, seeking review of an October 2012 Second Circuit Court of Appeals ruling that Argentina breached the pari passu provision in its debt contract with bondholders. The Supreme Court will rule on whether to take the matter in just a few weeks.
It is worth noting that the October 2012 ruling was only a preliminary decision. The final ruling against Argentina was filed by the Second Circuit on August 23, 2013 (see an earlier Legal Pulse blog post on it here). The August 2013 ruling, like the ruling of October 2012, decisively rejected all of the Argentine government’s arguments that a district court overstepped its bounds in ordering the government to comply with its obligations to rank its payments to “hold-outs” equally to other bondholders. Argentina will almost certainly file a second certiorari petition in late 2013 or early 2014 on the final ruling.
But the odds that the High Court will agree to hear the first or second certiorari petitions are quite slim. The Supreme Court generally limits its review to cases raising issues of federal law that have divided the lower courts. Argentina cannot meet those criteria. It not only has been unable to identify any court decisions that conflict with the Second Circuit’s ruling, but it also has raised objections that focus primarily on New York state law (e.g., how should specific language in bond agreements be interpreted) rather than federal law. Further, in response to Argentina’s complaint that this ruling will affect other sovereign restructurings, the August 23 ruling clarified that the judgment was narrowly tailored to address the very specific “extraordinary behavior” of a “uniquely recalcitrant debtor.” Continue reading “One More Obstacle For Argentina In Debt Case: Possible U.S. Supreme Court Recusal”