[JURIST] The US Court of Appeals for the Second Circuit [official website] ruled [opinion, PDF] on Friday that Argentina must pay $1.33 billion to bondholders when it repays its debts stemming from an economic collapse a decade ago. The Second Circuit affirmed a district court ruling that Argentina breached a promise when it prioritized paying holders of its restructured debt over the bondholders who held its defaulted debt. The appeals court rejected a dozen appeals by Argentina, including a claim that forcing it to repay the bondholders would lead to another economic collapse:
[N]othing in the record supports Argentina’s blanket assertion that the Injunctions will “plunge the Republic into a new financial and economic crisis.” … Argentina makes no real argument that, to avoid defaulting on its other debt, it cannot afford to service the defaulted debt, and it certainly fails to demonstrate that the district court’s finding to the contrary was clearly erroneous.
The Second Circuit remanded the case to the US District Court for the Southern District of New York [official website] for further proceedings consistent with its decision.
In August the Second Circuit rejected [JURIST report] Argentina’s attempt to prevent bondholders from acquiring bank documents regarding the country’s assets outside US territory, declaring that sovereign immunity was not an acceptable defense in this case. In September 2011 the US District Court for the Southern District of New York ruled [JURIST report] that Argentina had to comply with subpoenas requested by NML Capital Ltd. [corporate website], one of the bondholders of Argentina’s debts, for the collection of five money judgments totaling about $1.6 billion.