For Immediate Release
Argentina Debt Payments Blocked by US Court
WASHINGTON - The Argentine government announced Thursday that it transferred funds to the Bank of New York Mellon to pay the 92% of bond holders who restructured after Argentina's 2001 default. Reuters reports that Judge Thomas Griesa blocked the restructured debt payments until a settlement is reached on $1.65 billion that Griesa ordered be paid to hold-out creditors.
"We are in the middle of a ping pong match between Argentina and the hold-outs," stated Eric LeCompte, Executive Director of the religious debt relief group, Jubilee USA Network. "Unfortunately, as this battle continues in the courts, Argentina faces another default."
According to Griesa's ruling, Argentina must pay all creditors on June 30th, including hold-outs who won a court ruling to be paid in full. Because of a built-in 30-day grace period, Argentina now faces a July 30th deadline to resolve its dispute with the hold-outs or face a technical default. Griesa, concerned that Argentina is circumventing his orders, demanded all parties appear in court Friday morning.
If Argentina pays hold-out creditors the approximately $1.65 billion Judge Griesa has ordered it to pay, it would face claims from other hold-outs that would approach $15 billion, half of Argentina's reserves. If Argentina pays the hold-outs, it could also face lawsuits from the 92% of creditors who did not hold out seeking to be paid in full as well. The United Nations Conference on Trade and Development (UNCTAD) noted this week that those claims would exceed $120 billion.
"Argentina's in a tough place but will likely find a way through this situation," said LeCompte, who serves on expert groups for UNCTAD. "I'm really worried about how this court precedent is promoting predatory behavior and will hurt debt restructurings for poor countries."
Read a history and timeline of the case.
Read Jubilee's USA's filing urging the Supreme Court to take case.
Jubilee USA Network is an alliance of more than 80 religious denominations and faith communities, human rights, environmental, labor, and community groups working for the definitive cancellation of crushing debts to fight poverty and injustice in Asia, Africa, and Latin America.