Top U.S. court won't hear Argentina bond dispute appeal

[Eugene]

Source: Reuters

Top U.S. court won't hear Argentina bond dispute appeal

By Lawrence Hurley and Hugh Bronstein
WASHINGTON/BUENOS AIRES | Mon Oct 7, 2013 3:45pm EDT

(Reuters) - The U.S. Supreme Court on Monday declined to hear a preliminary appeal filed by Argentina over its battle with hedge funds that refused to take part in two debt restructurings stemming from the country's catastrophic 2002 default.

While not good news for President Cristina Fernandez, the court's decision did not alter a lower U.S. court's stay on a ruling ordering Argentina to pay the funds 100 cents on the dollar for the defaulted paper they hold.

Funds that reject the lower payments offered by Argentina's restructured bonds and demand full repayment of original debt totaling $1.3 billion have filed suits that have bounced around U.S. federal courts for more than a decade and could continue without final resolution for another year.

World markets are watching the case for the implications it might have on future sovereign debt restructurings. The International Monetary Fund has voiced fear that if Argentina is forced to pay the holdouts, it would make it more difficult for cash-strapped countries to re-negotiate their bond obligations.

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Read more: http://www.reuters.com/article/2013/10/07/us-usa-court-argentina-idUSBRE9960ES20131007

[leveymg]

1. Mitt Romney angel, Paul Singer, is one of the greediest vulture hedge fund operators.

Elliott Management Corporation
Main article: Elliott Management Corporation

In 1977, Singer founded the hedge fund Elliott Associates L.P. with $1.3 million from various friends and family members.[4] Elliott Management Corporation oversees Elliott Associates and Elliott International Limited, which together have more than $21 billion in assets under management.[6] According to The Guardian, "Elliott's principal investment strategy is buying distressed debt cheaply and selling it at a profit or suing for full payment."[7]

A 2012 CNN profile of Singer noted that losses sustained early in his career led to a “risk aversion that still guides his investing today. For example, he rarely uses leverage to juice returns.” Thanks to his caution, “Elliott has had only two down years” since 1977, rising “4.2% in 2011, a year in which most hedge funds lost money.” According to CNN, Singer focused from early times “on distressed assets,” buying up bankrupt firms' debt and acquiring “a reputation for strong-arming his way to profit.” Elliott has been involved “in most of the big post-crash restructurings, including Chrysler and auto parts supplier Delphi.” Over Elliott's history, it has averaged 14 percent annual returns, compared with 10.8% for the S&P 500 stock index as a whole.[8][9]
Comment on Bernanke

Business Insider reported on 30 January 2013 that Singer had given Ben Bernanke a “D” grade.[10]
Warning to G-7 leaders

Fellow hedge fund manager Jim Chanos revealed in an August 2009 radio interview that he and Singer had met with G7 finance ministers in 2007 to warn them that the global financial system was increasingly unstable and approaching a catastrophe, with banks on the verge of sinking the global economy. They argued that decisive action was called for, but were met with indifference. Chanos's recounting of this episode sparked an uproar in Britain, where many were angry that Gordon Brown, who had been present at the meeting, had ignored the experts' warning.[11]
Compuware

Forbes noted in December 2012 that Elliot Management had offered to purchase the software firm Compuware after having accumulated 8% of the company's stock. Elliott expressed the view that Compuware had great promise but had been underperforming under its current management.[12]
Romney and Delphi

The Nation reported in October 2012 that Mitt Romney, thanks to Singer, had made a large profit from President Obama's bailout of the auto industry. Romney and his wife had invested at least $1 million with Elliott, which bought Delphi, a bankrupt auto-parts manufacturer which the U.S. Treasury had allowed GM to give at least $2.8 billion of funds from the Troubled Asset Relief Program (TARP). The Nation estimated that the Romneys had consequently made at least $15.3 million.[13] In a 2 November 2012 Huffington Post article, Carl Pope wrote that Singer had threatened to close Delphi “unless the taxpayer bailed it out” – thereby “holding General Motors and Chrysler hostage, because if Delphi shut down, the companies would lack steering columns and other essential parts.” After receiving “a $7.3 billion bailout from the public,” Singer moved 25,000 Delphi jobs to China. “Mitt Romney's investments in Singer's fund help make this loss of American jobs possible,” maintained Pope.[14]
Purchasing sovereign debts

In 1996, Elliott bought defaulted Peruvian debt for a reported $11.4 million, In 1998, a U.S. court ruled that one could not buy debt with the sole purpose of suing the debtor. Elliott won a $58 million judgment in 2000, when the ruling was overturned.

After Argentina defaulted on its debt in 2002, NML Capital, a unit of Elliott, refused to accept its offer to pay less than 30¢ on the dollar on debts that originally amounted to over $182 million but that Elliott assessed were then worth $2.3 billion.[4][15]

In early October 2012, NML arranged for the seizure of an Argentinian naval vessel in Ghana, the ARA Libertad, in an effort to force Argentina to pay its debt. Argentina, however, refused to pay the debt, and shortly thereafter regained control of the ship and removed it from Ghanaian waters.[16]

In a November 2012 piece in the Huffington Post, Argentina's Foreign Affairs Minister, Hector Timerman, harshly criticized Singer for attempting to collect on the debt. Calling Singer “the inventor of vulture funds,” Timerman argued that the $127 million Singer had received from the Republic of Congo to settle a $400 million debt he had acquired for $10 million “should be going to build roads, schools and other poverty reduction programs.”[17]

In his investor letter for the fourth quarter of 2012, Singer described Argentina’s response to the court's ruling as “defiant and acrimonious,” saying that its dismissal of the ruling as “judicial colonialism” was “puzzling,” given that Argentina had chosen “to submit itself to the jurisdiction of New York courts and to waive its sovereign immunity.”[18]

In February 2013, the U.S. appeals court heard Argentina's appeal in the NML case.[19]

In March 2013, Argentina offered a new plan that was judged unlikely to be acceptable to the New York court.[20] On August 23, 2013 the U.S. Court of Appeals for the Second Circuit affirmed the lower cout's verdict and dismissed said plan.[21]

[Demeter]

3. Greg Palast Has Singer's Number--Pins Greece on him

http://us4.forward-to-friend.com/forward/preview?u=33e4ec877eed6a43863a4a92e&id=b2c4368622

[Judi Lynn]

5. Thanks for adding your Palast link. He's a force. n/t

[leveymg]

6. I saw that earlier today. Thanks!

[Judi Lynn]

4. You are kind to post this Singer information.

It's a real triumph every time it's possible to learn any of the truth missing from our corporate "news."

Very much appreciated.

[leveymg]

7. Back at you - you do a lot to make this place

still great, after all these years . . . Shout out to the others on this thread!

[Laelth]

2. k&r for exposure. n/t

-Laelth

[Socialistlemur]

8. The interesting issue is the ability to claim back full loan payments

This will make it a little harder to borrow money and default on the loan. Therefore bonds from countries with a poor reputation will pay higher interest rates. The higher interest rates will shift these countries into seeking more private investment. It's straightforward.

[Judi Lynn]

9. Probably everyone here knows the circumstances

under which so many loans were incurred, by whom, and with whose encouragement, where the money went, and why it was left for the poor to repay.

It has been discussed repeatedly for so many years by people who don't give a #### about how those who pull the strings like it when the poor have to default. because they can't repay the money borrowed by filthy fascist a-holes to benefit themselves and their allies.