SOURCE: Diaz Reus & Targ, LLP

Diaz Reus & Targ, LLP international law firm

May 24, 2010 13:40 ET

U.S. Judge Grants Restraining Order on Argentine Government Assets in $2.43 Billion Class-Action Bondholders Case

NEW YORK, NY--(Marketwire - May 24, 2010) -  In response to a request from eight plaintiff class-action groups holding defaulted Argentine bonds, U.S. District Court Judge Thomas P. Griesa today issued a restraining order that freezes $2.43 billion in Argentine government assets held by Banco de la Nación Argentina.

"For six years, Argentina has refused to pay its obligations to these bondholders," said attorney Michael Diaz, Jr., managing partner, Diaz Reus, an international law firm based in Miami and co-lead counsel. "As a result, the plaintiffs have taken action to collect on several judgments entered by the U.S. court in 2009 that cumulatively total $2.43 billion plus interest."

In early 2004, the bondholders took legal action against the Republic of Argentina seeking payment on eight separate series of defaulted global bonds and accumulated interest, and won a series of judgments on their behalf. "To date, those judgments have not been paid, and the Republic has not offered any justification for its failure," said Diaz Reus attorney Guillermo Gleizer.

The restraining order from Judge Griesa will allow the plaintiffs to attach all available U.S. assets held by Argentina in the name of its alter ego, Banco de la Nación Argentina. The order also halts any "sale, assignment, transfer or interference with any property" in which the government has an interest.

Recently, the Republic of Argentina launched a voluntary bond exchange program that discriminates against members of the class-action plaintiff groups, according to Gleizer. "Our motion was not an attempt to halt the bond exchange. Our goal was to restrain and freeze the assets of the Republic of Argentina in order to protect and attempt to make whole all bondholders who are not voluntarily participating in the exchange. That includes those bondholders who already have won judgments against the Republic of Argentina, who would suffer a net loss to the value of their bonds as a direct result of this exchange."

Diaz noted that under the Argentine government's exchange program, bondholders would lose their right to participate in a $2 billion attachment against funds held by Argentina in an account at the Depository Trust & Clearing Corporation (DTC) in the United States and frozen by a November 19, 2009 attachment order, "thereby pulling the rug out from under existing U.S. judgments," according to Diaz.

Under the government's program, current bondholders would exchange about $300 of their defaulted bonds for about $100 of new bonds (face value). However, members of the class-action groups would have to give up $300 in bonds plus another $150 -- their share of the value of the U.S. judgment and the value of the attached bonds.

Diaz noted that discriminatory pricing is not unknown in bond issuance cases. However, Judge Griesa recently held that Argentina should treat all recipients of the exchange offer in the same way. "As a result, it may well be that Argentina's offer is a violation of the judge's order and that the bond offer is invalid," he said. "Argentina should be made to go ahead in compliance with the lawful order of the U.S. judicial system to ensure equal treatment to all bondholders."

Miami-based Diaz Reus is a full-service international law firm focusing on trade and business transactions, complex commercial, civil, and criminal litigation and arbitration matters. The firm operates offices in Miami, Florida; Shanghai, China; Frankfurt, Germany; Caracas, Venezuela, and Mexico City, Mexico; as well as affiliate offices in Colombia and Brazil. For more information, visit www.diazreus.com.

Contact Information

  • Michael Diaz, Jr.
    Managing Partner
    Diaz Reus & Targ, LLP
    305.375.9220