FOR IMMEDIATE RELEASE
August 23, 2013
“Our
eyes are on the U.S. Supreme Court. We pray the court will not forget
the world’s poor as they consider taking the case,” asserted Eric LeCompte,
Executive Director of the religious antipoverty campaign known as Jubilee USA.
In
June, Argentina preemptively filed an appeal to the U.S. Supreme
Court asking to overturn an earlier U.S. 2nd Circuit Court ruling that
ordered Argentina to pay holdout creditors. Now that the 2nd Circuit
Court has upheld the ruling, the fate of the case lies in the hands of the U.S.
Supreme Court. In July, France filed an amicus brief to the U.S.
Supreme Court in support of Argentina’s request. The International Monetary
Fund’s Christine Lagarde planned a similar U.S. Supreme Court filing because of
the case’s significant implications on poverty and country debt restructurings.
Although Lagarde has maintained her concern about the hedge fund behavior, the
IMF did not file with the U.S. Supreme Court based on advice from the U.S.
Treasury. The U.S. Treasury will likely file in support
of Argentina if the U.S. Supreme Court accepts the case.
The U.S. has filed in support of Argentina at various
stages of the case before lower courts because of the appeal’s impact on global
debt restructuring, poor country access to credit and state sovereignty rights.
“The
religious community is saddened by the 2nd Circuit’s decision as it hurts poor
people around the globe,” shared LeCompte. “It’s up to the U.S. Supreme Court
now to overturn the 2nd Circuit ruling in order to prevent these hedge funds
from targeting poor countries and struggling economies.”
NML
Capital, a subsidiary of Elliott Management, purchased Argentine debt cheaply
when the nation defaulted in the early 2000s. Since then, ninety-two percent of
debt holders restructured. Holdout creditors, led by NML Capital, rejected
restructuring deals and continue to sue Argentina for the full
amount. Hedge funds, like NML Capital, that purchase deeply discounted
debt of poor or financially-distressed countries and then sue to make high
profits are known as “vulture funds.” Often, these funds try to collect off of
funds meant to benefit the poorest in developing countries.
In
addition to the U.S. raising concerns, the IMF and World Bank have continually expressed concern over
this hedge fund behavior. German courts sided with Argentina and rejected
similar hedge fund claims to Argentine assets in Germany.
At
the end of 2012, the U.S. 2nd Circuit Court ordered Argentina to
pay holdout creditors $1.3 billion upon its interpretation of a pari
passu, or parity clause. Argentina appealed and the U.S.
Court suspended the ruling to hear new oral arguments in February 2013.
After arguments, the court ordered Argentina to outline an alternate
payment plan to holdout creditors. Holdout creditors rejected the plan that was
essentially the same deal that ninety-two percent of creditors previously
took. The 2nd Circuit upheld its ruling and interpretation of pari
passu or the parity clause in today's ruling.
“Unfortunately,
the decision of the 2nd Circuit is too narrow and short-sighted. Their
interpretation of the parity clause is deeply flawed,” noted LeCompte.
Read
the case here.
Read more on our webpage dedicated to the case.
Jubilee USA Network is
an alliance of more than 75 U.S. organizations, 250 faith communities and 50
Jubilee global partners. Jubilee's mission is to build an economy that serves,
protects and promotes participation of the most vulnerable. Jubilee USA has won
critical global financial reforms and more than $130 billion in debt relief to
benefit the world’s poorest people. www.jubileeusa.org
Available for
interview: Eric LeCompte, Executive Director
Contact: Jennifer Tong, Communications
Director
jennifer@jubileeusa.org / (m) (320) 241-7082 / (o) (202) 783-3566 x101
