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Argentine Bondholders See Early Success after Bringing Boies, Schiller & Flexner into Complex Debt Litigation

03.08.2013


David Barrett

In a closely-watched international case, Boies, Schiller & Flexner Chairman David Boies argued on February 27, 2013, at a special sitting of the U.S. Court of Appeals for the Second Circuit on behalf of holders of bonds issued byArgentina in exchange for $80 billion in defaulted sovereign debt.

The group, led by Gramercy Funds Management, entered the litigation as an interested non-party after an October 26, 2012 ruling which approved in principle an injunction that could blockArgentinafrom paying interest on the exchange bonds unless it also pays $1.3 billion to holdout investors that have refused to accept the exchange offer.  Shortly after being retained, BSF successfully moved for a stay of the injunction pending decision by the Court of Appeals.

The Exchange Bondholders previously agreed to accept less than 30 cents on the dollar of face amount of their Argentine bonds, as part of an internationally-sanctioned restructuring of Argentina’s debt.  The Exchange Bondholders argue that the injunction improperly imposes a new condition on their right to receive interest payments solely for the purpose of coercing Argentina (through the threat of default on the exchange bonds) to pay the holdouts.  This not only violates fundamental principles of equity, but violates Fifth Amendment due process rights by taking private property for a private purpose. 

BSF attorneys representing the Exchange Bondholders include Chairman David Boies; partners David Barrett, Steven Froot, and Nicholas Gravante, Jr.; counsel Brad Smith; and associates Bridget Brown, Karen Chesley, Juan Valdivieso, Gary Studen, David Ata, and Mathew Schutzer.