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U.S. government intervenes in favor of Argentina

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Staff writer ▼ | December 10, 2013
ArgentinaThe U.S. government has asked the U.S. Supreme Court to intervene over a hedge fund's effort to gain information about Argentina's non-US assets as part of an ongoing litigation.

The hedge fund, NML Capital, a holder of Argentine bonds, wants repayment in full in a fight that was prompted by Argentina's default on $120 billion in sovereign debt in 2002. That is the subject of high-profile litigation that could be headed to the U.S. Supreme Court in a separate case.

However, in the different case in which US Solicitor General Donald Verrilli filed a brief this week, the question is the narrower issue of whether NML could enforce subpoenas against Bank of America and Banco de la Nacion Argentina seeking information about Argentina's non-US assets. In August 2012, the 2nd U.S. Circuit Court of Appeals in New York rejected Argentina's argument that the subpoenas should be quashed because it would infringe on its sovereign immunity.

NML, a unit of billionaire hedge fund manager Paul Singer's Elliott Management Corp, is one of several bondholders which rejected offers (in 2005 and 2010) accepted by other investors to swap the defaulted debt for new paper at a steep discount. The other major player is Aurelius Capital Management.

Last month, in the more high-profile case, the same appeals court declined to reconsider an order requiring Argentina to pay 1.33 billion, ruling in favor of the bondholders. Argentina is now expected to seek a Supreme Court review in that case.

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