FOR IMMEDIATE RELEASE
February 27, 2013
Contact: Jennifer
Tong, Communications Director
jennifer@jubileeusa.org / (m) (320) 241-7082
/ (o) (202) 543-0692
Arguments End in
‘Debt Trial of the Century’
2nd
Circuit Court of Appeals to Rule on Vulture Funds and Argentine Bonds
NEW
YORK – Arguments concluded today for Argentina and two holdout vulture
funds, including Paul Singer’s NML Capital. The Financial Times dubbed the
proceeding the “‘the trial of the century’ in sovereign debt restructuring.”
Jubilee USA Network’s Executive Director, Eric LeCompte observed the legal
proceedings. Jubilee USA held a vigil outside the courthouse for poor people
that are affected by vulture funds.
“Judges
at the 2nd U.S. Circuit Court of Appeals will issue their ruling in the coming
weeks. We pray that they will side with the people of Argentina, the US Government
and the world’s poorest people,” said Eric LeCompte, Jubilee USA Network
Executive Director.
NML
Capital bought Argentine debt in 2001 cheaply when Argentina defaulted.
Argentina restructured with some of their creditors but holdout creditors, led
by NML, rejected the proposal and sued for the full amount. Vulture funds
buy the debt of poor countries or countries in financial recovery for pennies
on the dollar and then sue to make as much as a 400% profit off the backs of
the poor. Jubilee USA Network introduced legislation in 2009 to stop vulture
funds from making a profit off of poor countries.
The
US Government filed a friend-of-the-court brief noting a ruling against
Argentina could make it much harder for countries in financial recovery or
countries facing economic stresses to access credit and debt swaps. The
International Monetary Fund and World Bank assert that vulture funds negatively
impact debt relief and restructuring efforts in poor countries.
“Vulture
funds such as NML Capital speculate on the misfortune of countries and saddle
developing countries with huge debt loads, depriving them of valuable financial
resources badly needed for domestic development and growth,” said Bhumika
Muchhala from the Third World Network, an independent network of organizations
focused on developing countries.
In
June, these same vulture funds supported legislation in the New York State
Senate and Assembly which would have allowed the funds to continue to litigate
even after post-court judgment. Jubilee USA Network came out against the
legislation by mobilizing 4,000 supporters in NY to write, e-mail and call
their State Assembly and Senate Members. With American Jewish World Service,
Jubilee USA put enough pressure on the New York legislative bodies to stop the
legislation from coming to a vote.
In
October, the vulture funds were able to convince Ghanaian Courts to temporarily
seize an Argentine ship. The ship was eventually returned to Argentina. Then
this past November, the vulture funds made a pari passu or parity argument in
the US District Court and the court ruled in favor of the vulture holdout
creditors. Argentina was ordered to pay $1.3 billion on December 15, the same
date they were to pay the creditors that had restructured. The federal appeals
court froze the payout and heard new arguments today in the 2nd U.S. Circuit
Court of Appeals in New York. A ruling is expected in the coming weeks.
“If
the judges rule in favor of these hedge funds, it will mean these funds will
more aggressively target poor countries in fragile financial recovery. If
they rule with Argentina, it will mean that it will be harder for these types
of funds to exploit countries in financial distress. The actions of NML
Capital and Aurelius Capital hurt legitimate investors and poor people,” said
LeCompte.
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Jubilee USA Network is an alliance of
more than 75 US organizations, 250 faith communities and 50 Jubilee global
partners. Jubilee USA Network has won critical global financial reforms
and more than $130 billion in debt relief for the world’s poorest
countries. www.jubileeusa.org
