motion to file amicus - duane morris

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUITThurgood Marshall U.S. Courthouse 40 Foley Square, New York, NY 10007 Telephone: 212-857-8500

MOTION INFORMATION STATEMENT

Docket Number(s): Caption [use short title]

Motion for:

Set forth below precise, complete statement of relief sought:

MOVING PARTY: OPPOSING PARTY: 9 Plaintiff 9 Defendant

9 Appellant/Petitioner 9 Appellee/Respondent

MOVING ATTORNEY: OPPOSING ATTORNEY:

[name of attorney, with firm, address, phone number and e-mail]

Court-Judge/Agency appealed from:

Please check appropriate boxes: FOR EMERGENCY MOTIONS, MOTIONS FOR STAYS AND

INJUNCTIONS PENDING APPEAL:

Has movant notified opposing counsel (required by Local Rule 27.1): Has request for relief been made below? 9 Yes 9 No

9 Yes 9 No (explain): Has this relief been previously sought in this Court? 9 Yes 9 No

Requested return date and explanation of emergency:

Opposing counsel’s position on motion:

9 Unopposed 9 Opposed 9 Don’t Know

Does opposing counsel intend to file a response:

9 Yes 9 No 9 Don’t Know

Is oral argument on motion requested? 9 Yes 9 No (requests for oral argument will not necessarily be granted)

Has argument date of appeal been set? 9 Yes 9 No If yes, enter date:__________________________________________________________

Signature of Moving Attorney:___________________________________Date: ___________________ Has service been effected? 9 Yes 9 No [Attach proof of service]

ORDER

IT IS HEREBY ORDERED THAT the motion is GRANTED DENIED.

FOR THE COURT:CATHERINE O’HAGAN WOLFE, Clerk of Court

Date: _____________________________________________ By: ________________________________________________

Form T-1080

Case: 12-105 Document: 955-1 Page: 1 04/22/2013 915179 1

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DM3\2517147.1

IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

NML Capital, Ltd. et al,

Plaintiffs-Appellees,

v. Republic of Argentina,

Defendant-Appellant.

:::::::::::

CIVIL ACTION NO. 12-105(L)

MOTION FOR LEAVE TO FILE AN AMICUS CURIAE BRIEF

Pursuant to Federal Rule of Appellate Procedure 29(b), the Duane Morris

Individual Plaintiffs, through their counsel, Duane Morris LLP, respectfully

move for leave to file the attached AMICUS CURIAE BRIEF OF THE DUANE

MORRIS INDIVIDUAL PLAINTIFFS. The Duane Morris Individual Plaintiffs, who

were granted leave to file -- and filed --an amicus brief in support of Plaintiffs-

Appellees in connection with the Republic of Argentina’s (“Republic”) appeal

of the district court’s orders of November 21, 2012 (the “Appeal”), asked all

parties and intervenors whether they objected to the filing of an amicus brief.

Counsel’s April 17, 2013 letter sent to all counsel is attached to the Declaration

of Suzan Jo as Exhibit A. As of the filing of this Motion, counsel for Plaintiff-


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Appellees, NML Capital, Ltd., and the Aurelius funds; counsel for the Republic;

and counsel for the Exchange Bondholders group object to the filing of the brief.

STANDARD

A potential amicus may file as amicus curiae by leave of court when “the

movant [has an] interest,” the “amicus brief is desirable,” and “the matters

asserted are relevant to the disposition of the case.” Fed. R. App. P. 29(b); see,

e.g., Hui Lin Huang v. Holder, 677 F.3d 130, 133 (2d Cir. 2012). As discussed

further below, all these factors are present here.

1. THE DUANE MORRIS INDIVIDUAL PLAINTIFFS HAVE AN INTEREST IN THIS CASE.

The Duane Morris Individual Plaintiffs were granted leave to file an

amicus brief in connection with the Appeal. Thus, this Court has already

recognized that the Duane Morris Individual Plaintiffs have an interest in this

case.

To recapitulate, the Duane Morris Individual Plaintiffs are a group of

various individual judgment creditors who hold bonds issued by the Republic of

Argentina. These bonds are currently in default, and have been since 2001. The

Duane Morris Individual Plaintiffs, who bought pursuant to the same 1994

Fiscal Agency Agreement (“FAA”) at issue here, opted not to participate in the

exchange offers made by Argentina in 2005 and 2010. Therefore, the Duane


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Morris Individual Plaintiffs’ rights were also violated by the exchange offers

and the adoption of the Lock Law, and the outcome of this appeal will impact

the Duane Morris Individual Plaintiffs. The Duane Morris Individual Plaintiffs

have previously filed an amicus brief in this Appeal.

2. THE DUANE MORRIS INDIVIDUAL PLAINTIFFS’ BRIEF IS DESIRABLE AND RELEVANT TO THE DISPOSITION OF THE CASE.

This Court had already held that the Republic violated the pari passu

clause of the 1994 FAA when it made payments to the Exchange Bondholders

without a corresponding payments to the holdout bondholders and when it

passed the Lock Law. Id. at 3. The only question is the determination of the

appropriate scope of the remedy available for the Republic’s violation.

Given the Republic’s recalcitrant attitude, one may wonder why the

Republic wastes this Court’s time by submitting a proposal that purportedly

mirrors the offers previously rejected by the holdouts. One may also wonder

why the Republic continues to avail itself of the protections of our courts, all the

while publicly stating that: it has no intention of complying with orders of the

Court with which it disagrees; and as recently as March 31, 2013, reiterating its


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disdain for our courts by restating its intention to pay Exchange Bondholders

“no matter what[.]”1

In its post-argument Order of March 1, this Court directed the Republic to

“submit in writing to the court the precise terms of any alternative payment

formula and schedule to which it is prepared to commit.” See NML Capital Ltd.

v. Republic of Argentina, Docket No. 12-105(L), Dkt. # 903, at 1 (2d Cir. Mar.

1, 2013). Specifically, the Court directed the Republic to indicate:

(1) how and when it proposes to make current those debt obligations on the original bonds that have gone unpaid over the last 11 years; (2) the rate at which it proposes to repay debt obligations on the original bonds going forward; and (3) what assurances, if any, it can provide that the official government action necessary to implement its proposal will be taken, and the timetable for such action. Id. at 2.

In response, the Republic submitted a response that simply mimicked its 2005

and 2010 debt exchanges, which the holdout bondholders have already rejected.

The Duane Morris Individual Plaintiffs seek to file their amicus brief in

order to aid the Court in its evaluation of the Republic’s proposal. In this

regard, the amicus brief analyzes several fatal flaws in the Republic’s proposal

1 See Declaration of Suzan Jo, dated April 22, 2013 (hereinafter “Jo

Decl.”), Ex. B (Katia Porzecanski, New York-for-Buenos Aires Swap Theory Spreads: Argentina Credit, BLOOMBERG NEWS, Apr. 03, 2013, available at http://www.bloomberg.com/news/print/2013-04-03/new-york-for-buenos-aires-swap-theory-spreads-argentina-credit.html).


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and also sets forth factors for the Court’s consideration in determining an

appropriate remedy for the violation of the pari passu clause.

A. The Republic’s Proposal On How It Would Make The Holdout Bondholders Whole on The Past Due Interest Is Flawed.

In its March 1 Order, the Court’s first question to the Republic was “how

and when it proposes to make current” its past debt obligations. In its proposal,

the Republic simply ignores this part of the Court’s directive: it says that it will

pay nothing on account of interest that accrued during the first two years (2001-

2003) after the Republic’s default. See NML Capital Ltd. v. Republic of

Argentina, Docket No. 12-105(L), Dkt. # 935 (2d Cir. Mar. 29, 2013). As to

the remaining years, the Republic states that it will not “make current those debt

obligations on the original bonds that have gone unpaid over the last 11 years.”

Id. at 1, 3-4 (emphasis added). Instead, the Republic says it will pay interest to

the holdouts at rates specified in the Exchange Bonds, not the original Bonds.

Id.

The Republic’s proposal sets forth two “Options” for the holdout

bondholders: the “Par Option” and the “Discount Option.” Id. at 2-4. To further

dilute the attractiveness of its proposal, the Republic limits the Par Option to

$50,000 per series, despite its recognition that “[T]he Par option is designed for


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individual

bondholders . . . .”2 Id. at 3. Moreover, this Par Option offer is limited to

paying interest only for the period during which the current holder actually held

the bonds: this additional limitation allows the Republic to (a) “self-forgive” its

obligation to pay some accrued payment, and (b) ignore the Court’s directive

that the Republic explain how interest would be paid on the original bonds. In

short, the Republic has ignored this Court’s March 1 Order by taking the

position that it will only make a lump-sum payment of a small fraction of

indebtedness accumulated during eleven years of unilaterally-imposed non-

payment.3 This deficiency is reason enough to reject the Republic’s Proposal.

The Republic explains that its proposal, with respect to the past due

payments, matches the amounts paid to the Exchange Bondholders. Id. at 4-5,

2 Individual bondholders who have more than $50,000 in “Eligible

Amount” (a category including many retirees) would be forced to take the “Discount Option,” further reducing the lump-sum cash payments made available to the holdouts. As a consequence, the $50,000 limitation would deprive many retirees of a significant cash payment they badly need.

3 The scope of the Republic’s proposal is limited to the plaintiffs in this action (who are a sub-set of the holdouts). This Court specifically directed that the Proposal address all the holdout bonds, and this directive was ignored as well.


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7-8, 11, 13, 15. Since it purports to treat all bondholders equally, the Republic

reasons that the pari passu requirement will be fulfilled.

Given not only the Republic’s violations of the pari passu clause, but also

its dogged long-term defiance of the courts of the United States, there is no

reason why any retroactive remedy should be limited by terms to which the

Exchange Bondholders have agreed. Retroactively, the only sensible resolution

is a lump-sum payment of all interest and principal that has accrued and become

due and payable in eleven years to all the current holders of the holdout bonds

(hereinafter, the “Accrued Payment Component”). Such a payment would be

directed through an order for specific performance, which this Court has

endorsed as the appropriate remedial device. NML Capital Ltd., 699 F.3d at

261-262.4

B. The Republic’s Proposal On The Treatment Of Its Future Obligation Is Also Flawed.

Argentina also ignored the Court’s second inquiry, i.e., “the rate at which

[the Republic] proposes to repay debt obligations on the original bonds going

forward.” The Court directed the Republic to specify “the rate at which it

proposes to repay debt obligations on the original bonds going forward.” See 4 The Republic may fear that a voluntary payment exceeding the amount

paid to the Exchange Bondholders would trigger other litigation by the Exchange Bondholders. An involuntary payment ordered by the courts would not.


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NML Capital Ltd., Dkt. # 903, at 2. This Court’s acceptance of Argentina’s

proposal would do nothing more than cancel the original bonds and force the

Exchange bonds on all the holdouts, who would be effectively subjected to a

judicial cram-down. This portion of the Republic’s proposal ignores the fact

that this Court specifically recognized the right of individual holders to reject the

Republic’s penny-ante exchange offers.5

With respect to the Accrued Payment Component, the Republic should be

ordered that immediately. With respect to the future component, the Proposal is

not responsive to the Court’s request, and should be rejected.

5 Argentina’s flagrant disregard of U.S. courts has not gone unnoticed. The

Institute of International Finance (IIF), which is comprised of the major banks of the world, has remarked that “Argentina finds itself in this complicated situation by its own behavior, evidenced by more than a decade of unilateral treatment of its creditors.” See Jo Decl., Ex. C (Mariana Shaalo, Argentina vs. Holdouts: Moody’s Minimizes Impact of Litigation with Vultures and Recalls that the Swap was Unilateral and Coercive, AMERICAN TASK FORCE ARGENTINA, Apr. 10, 2013, available at http://www.atfa.org/argentina-vs-holdouts-moodys-minimizes-impact-of-litigation-with-vultures-and-recalls-that-the-swap-was-unilateral-and-coercive/). The IIF also commented that the determination of the remedy “should be done carefully to not condone the unilateral actions by a sovereign debtor and weaken the rights of subsequent creditors, especially the right to demand reparations in court.” See Jo Decl., Ex. D (Veronica Dalto, Global Bankers Warn About The Risk of Pardoning Argentina, AMERICAN TASK FORCE ARGENTINA, Apr. 5, 2013, available at http://www.atfa.org/global-bankers-warn-about-the-risk-of-pardoning-argentina/).


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C. The Republic’s Did Not Even Attempt In Good Faith To Respond To The Court’s Third Inquiry.

On this Court’s final question, “what assurances, if any, [the Republic]

can provide that the official government action necessary to implement its

proposal will be taken, and the timetable for such action,” (NML Capital Ltd.,

Dkt. # 903, at 2) the Republic devotes a three-sentence paragraph in which it

mouths principles of democratic government (NML Capital Ltd., Dkt. # 935, at

2). The Republic appears to be avoiding a direct answer here as well, and its

virtual disregard of the “timetable” requirement is remarkable. The holdouts,

and this Court, are entitled to a much more considered response after eleven

years of contentious litigation and outright evasion by the Republic.

In short, the Republic has ignored or evaded each one of this Court’s

requirements. There is no real choice but to reject the proposal. The question is

the extent, if any, that the district court’s order should be modified.

CONCLUSION

Based upon the foregoing, the Duane Morris Individual Plaintiffs

respectfully requests that the Court grant it leave to file the AMICUS CURIAE

BRIEF OF THE DUANE MORRIS INDIVIDUAL PLAINTIFFS.

[SIGNATURES ON FOLLOWING PAGE]


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DUANE MORRIS LLP

/s/Anthony J. Costantini Anthony J. Costantini [email protected] Rudolph J. Di Massa, Jr. [email protected] Suzan Jo [email protected] Mary C. Pennisi [email protected] 1540 Broadway New York, NY 10036-4086 Telephone: +1 212 692 1000 Fax: +1 212 692 1020

Counsel for Duane Morris Individual Plaintiffs

Dated: April 22, 2013


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1

IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

NML Capital, Ltd. et al,


v. Republic of Argentina,

Defendant-Appellant.

:::::::::::

CIVIL ACTION NO. 12-105(L)

DECLARATION OF SUZAN JO, ESQ.

SUZAN JO, ESQ. declares under penalty of perjury pursuant to 28

U.S.C. § 1746 as follows:

1. I am associated with the law firm of Duane Morris LLP and a

member of the bar of this Circuit. I am fully conversant with the facts and

circumstances set forth herein. I submit this declaration in support of the

Duane Morris Individual Plaintiffs’ Motion For Leave To File An Amicus

Curiae Brief.

2. The Duane Morris Individual Plaintiffs, who filed an amicus

brief on the remand, asked all parties and intervenors whether they objected to


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2

the filing of an amicus brief. Attached hereto as Exhibit A is the true and

correct copy of the April 17, 2013 letter sent to all counsel.

3. The Duane Morris Individual Plaintiffs received objections from

counsel for NML Capital, Ltd., the Aurelius Funds, the Republic of

Argentina, and the Exchange Bondholders.

4. Attached hereto as Exhibit B is the true and correct copy of

Katia Porzecanski, New York-for-Buenos Aires Swap Theory Spreads:

Argentina Credit, Bloomberg News, Apr. 03, 2013, available at

http://www.bloomberg.com/news/print/2013-04-03/new-york-for-buenos-

aires-swap-theory-spreads-argentina-credit.html.

5. Attached hereto as Exhibit C is the true and correct copy of

Mariana Shaalo, Argentina vs. Holdouts: Moody’s Minimizes Impact of

Litigation with Vultures and Recalls that the Swap was Unilateral and

Coercive, American Task Force Argentina, Apr. 10, 2013, available at

http://www.atfa.org/argentina-vs-holdouts-moodys-minimizes-impact-of-

litigation-with-vultures-and-recalls-that-the-swap-was-unilateral-and-

coercive/.

6. Attached hereto as Exhibit D is the true and correct copy of

Veronica Dalto, Global Bankers Warn About The Risk of Pardoning


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EXHIBIT A


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EXHIBIT B


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New York-for-Buenos Aires Swap Theory Spreads: Argentina CreditBy Katia Porzecanski - Apr 3, 2013

Argentina’s refusal to improve its offer to holders of defaulted debt suing for full payment in the

U.S. is deepening speculation that the nation will sever ties with the overseas bond market.

The proposal submitted on March 29 mimics the terms of Argentina’s 2005 and 2010 debt

exchanges, a move that could lead to a default on the restructured notes unless the country

removes them from U.S. jurisdiction. While benchmark notes due 2033 sank as much as 2.5 cents

to 51.8 cents on the dollar after Argentina made the offer, they’ve since recouped all their losses as

investors bet that the government will swap them into debt governed by Argentine law.

Vice President Amado Boudou’s pledge on March 31 to pay restructured bondholders “no matter

what” is adding to speculation the government is preparing contingency plans to keep servicing the

debt as it heads toward an impasse with U.S. courts. The 12.71 percentage point gap on yields of

Argentine bonds over U.S. Treasuries, while the widest among major emerging markets, is down

from a four-year high of 13.4 percentage points on Nov. 28.

“Win, lose or draw, if Argentina is pushed, they’ll redo the payment system without a doubt” and

shift investors from debt issued under New York law, Ray Zucaro, who helps oversee $300 million

of emerging-market debt at SW Asset Management, said by phone from Newport Beach,

California. “If push comes to shove and they rule, that’s what they’ll do.”

Argentina’s Prospects

Norma Madeo, a spokeswoman for the Economy Ministry, didn’t reply to an e-mail message

seeking comment on the government’s plans to pay bondholders.

The latest offer to holdout creditors from the nation’s record $95 billion default in 2001 means the

government will probably lose its bid to overturn a lower-court ruling that requires the nation to

repay in full, according to Anna Gelpern, a law professor at American University in Washington.

Jonathan Blackman, a lawyer for Argentina, told the appeals court in February that the nation

Page 1 of 4New York-for-Buenos Aires Swap Theory Spreads: Argentina Credit - Bloomberg

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wouldn’t obey the order to make a full payment to the holdouts, which include billionaire Paul

Singer’s hedge fund Elliott Management Corp.

That confrontation sets up a potential default on the restructured notes because the lower court

also blocked the government from servicing those securities without making a $1.3 billion

payment.

‘Whatever Context’

In an interview on local television, Boudou told reporters, “Argentina will meet its commitments in

whatever context. We’re not going to accept a blockage of Argentina’s willingness and ability to

pay.”

Alfredo Scoccimarro, a presidential spokesman, didn’t return telephone calls seeking comment on

Boudou’s statement.

The appeals court asked the holdouts yesterday to file a response to Argentina’s proposed payment

plan by April 22.

Boudou’s comments mean the government is willing to be in contempt of court to make about $1.7

billion in payments this year to investors who accepted losses of about 70 percent in the

restructurings, according to Sebastian Vargas, an economist at Barclays Plc.

If the court rules in favor of the holdouts and prevents intermediaries such as Bank of New York

Mellon Corp. from transferring money to restructured bondholders, Argentina may change the

notes’ jurisdiction to Argentine or even Italian law, according to Alberto Bernal, the head of fixed-

income research at Miami-based brokerage Bulltick Capital Markets.

Changing Jurisdiction

Argentina can change the legislation over a single series of the bonds if holders of 75 percent of the

securities consent, according to the securities’ prospectuses. Changing the jurisdiction of two or

more series would require approval by owners of at least 85 percent of all affected bonds and by

holders of at least two-thirds of each individual series.

“We are hearing that Buenos Aires has advanced materially in an eventual ‘Plan B,’” Bernal wrote

in a note to clients April 1. The plan may also include reopening the exchange for holdouts who

aren’t already suing Argentina and a buyback offer for New York-law bonds, according to Bernal.




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Traders shouldn’t underestimate how difficult it would be for President Cristina Fernandez de

Kirchner to prevail under such a plan if the appeals court upholds U.S. District Judge Thomas

Griesa’s ruling, according to Bank of America Corp.

The only way Argentina can continue to pay if the ruling is upheld is “with a totally new, non-U.S.

payment chain, which would take a long time to construct,” Jane Brauer and Flavio de Andrade,

strategists at Bank of America in New York, wrote in a March 27 report.

Third Parties

An exchange into local-law bonds would require bondholders to agree to move their notes to an

Argentine custodian that is a member of Euroclear Bank SA, the world’s biggest settlement system,

to cancel the current bonds, the analysts said in the report. A cancellation would have to be routed

through BNY Mellon, and intermediaries including Euroclear and the Depository Trust Co. would

probably alert the court for clarification, according to the report.

“There may be bondholders that are in support of Argentina’s making a payment, but may not be

as comfortable changing the instruments to Argentine law with all payments made in Argentina

through the Argentine payment system,” Bruce Wolfson, a lawyer at Bingham McCutchen LLP in

New York, who has more than 30 years of experience in emerging-market debt restructurings, said

in a telephone interview. “It’s in my experience unprecedented.”

Debt Indexes

Bonds issued under Buenos Aires law wouldn’t qualify for benchmark international debt indexes,

which would prevent some funds from owning them, according to Bank of America.

Most emerging-market debt sold overseas is governed by New York law, according to the

International Monetary Fund. Before seeking to circumvent the ruling, Argentina can try to appeal

to a larger number of judges or the U.S. Supreme Court.

The cost to protect $10 million of Argentine debt against non-payment during five years with credit

-default swaps fell 108 basis points, or 1.08 percentage points, to 3,271 basis points yesterday, data

compiled by CMA Ltd. show. The swaps pay the buyer face value in exchange for the underlying

securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Investor Optimism

While firms from JPMorgan to Credit Suisse Group AG said the bonds would sink following

Argentina’s payment proposal, restructured notes have fallen just 0.1 percent since March 29,

according to index data compiled by JPMorgan. That’s a sign investors are optimistic that




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Argentina will do whatever it takes to remain current on the notes, according to Mario Rappoport,

a managing director at Gleacher & Co. in New York.

“All the investors who had their position in Argentina already went through enough hell,”

Rappoport said in a telephone interview. “It just doesn’t feel like the market is ready to collapse.”

To contact the reporter on this story: Katia Porzecanski in New York at

[email protected]

To contact the editors responsible for this story: David Papadopoulos at

[email protected]; Michael Tsang at [email protected]

®2013 BLOOMBERG L.P. ALL RIGHTS RESERVED.




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EXHIBIT C


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Argentina vs. holdouts: Moody’s minimizes impact of litigation with vultures and recalls that the swap was unilateral and coerciveEl Cronistsa

April 11, 2013 By Mariana Shaalo

The risk ratings agency Moody’s asserted yesterday in a report that the Argentine debt restructuring was a unique case in the last 15 years for its “unilateral” and “coercive” character.

In this manner, it minimized the argument from the Argentine government that argues that an unfavorable sentence in the Court of Appeals in New York which benefits the holdouts would put at risk future sovereign debt restructurings.

Last week, the Institute of International Finance (IIF) which is made up of the main banks of the world, had remarked in a report that “Argentina finds itself in this complicated situation by its own behavior, evidenced by more than a decade of unilateral treatment of its creditors.”

“The sovereign debt restructurings of the last 15 years generally have been resolved in a rapid manner and almost always without holdout litigation,” Moody’s pointed out in its report to investors. Reviewing 34 debt swaps since 1997, it remarked that only two – from Argentina and from the Dominican Republic – had a balance of a large percentage of holdouts and remarks that only in the Argentine case was there “persistent litigation” with the creditors that didn’t accept the restructurings.

“In almost all the swaps a creditors’ committee was created in a reasonable amount of time and there were relatively rapid negotiations, but the Argentine case was and continues to be unique by its unilateral and coercive focus,” said Elena Duggar, author of the report.

According to the analysis, on average, sovereign debt restructurings closd 10 months after the government made known its intention to hold exchanges and seven months aftr the start of negotations with creditors.

Moody’s asserted that, in the last 34 cases analyzed, the rate of participation by debt holders was 95%, versus 75% in Argentina and 72% in the Dominican Republic. However, it pointed out that these percentags rose to 93% in the former and 100% in the latter.

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In mid-March the ratings agency has lowered Argentina’s restructured debt rating a notch (from ‘B3’ to ‘Caa1’) for the litigation in the U.S. courts.

Event the Greylock fund which holds Argentine restructured bonds whose payments could be blocked incase of an adverse ruling asked that the country’s “unusually intransigent conduct” not be tolerated, in an article recently published in the Financial Times. “There is no evidence that the recent court decisions against Argentina, which never made a good will offer, will impede future sovereign restructurings. Quitethe contrary,” it said.

The same point was made days earlier by the vulture fund Aurelius, one of the plaintiffs. “Argentina is the best example in the world of how a country should not treat its creditors. The global financial system is at risk by compensating this conduct and by not making it honor its contracts,” wrote its head, Mark Brodsky.

Argentina vs. holdouts Moody’s minimiza impacto de litigio con buitres y recuerda que el canje fue unilateral y coercitivo

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American Task Force Argentina

PO Box 3197

Arlington, VA 22203-0197

888-662-2382

[email protected]

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EXHIBIT D


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Global bankers warn about the risk of pardoning ArgentinaEl Cronista

April 5, 2013

By Veronica Dalto

Awaiting the respond to payment proposal that Argentina filing in New York court to the vulture funds, similar to the last swap, the bank banks of the world reacted with concern over the possibility that the decisions that are taken in the Argentine case end up “condoning the unilateral actions” of the country, and for the implications that could have for the international sovereign debt market, weakening creditor rights in the future and the legal certainties that sustain them.

This is how they see it in the monitoring of the capital markets from the Institute of International Finance (IIF), the global association of the biggest financial entities of the world, where they are also analyzing the Cyprus bailout.

The IIF didn’t fail to place the Argentine case in the “correct historical context.” This is that “Argentina finds itself in this complicated situation by its own behavior, evidenced by more than a decade of unilateral treatment of its creditors.” “Since the private sector creditors and investors don’t have the luxury of waiting forever, many (but not all including thousands of small investors) have been obliged to accept the swap that Argentina offered in 2005 and 2010.”

A portion of the holdouts now have until April 22 to take the Argentine offer or not as payment for their claim of US$1.3 billion. Then the court could delay a couple of months to issue its sentence, which the IIF already predicts will be a rejection towards Argentina.

The entity, which coordinated the interests of the big banks in the rescue of Greece, pointed out that the Argentine case had “fortunately” been a “rare case” among the other 11 recent debt restructurings, where the sovereign debtor could negotiate with private creditors an agreement that was “mutually acceptable upon an opportune and orderly basis.”

For IIF, the current debate over improving the framework of sovereign debt restructurings, in legal terms or clarifying the meaning of pari passu in bond contracts, “should be done carefully to not condone the unilateral actions by a sovereign debtor and weaken the rights of subsequent creditors, especially the right to demand reparations in court.”

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“If it does that, it could put on the front burner the essentially inapplicable character of assets before a sovereign debtor, raising uncertainty, risk and costs in the sovereign debt markets to the detriment of allthe participants in the global financial markets,” he added.

According to the IIF, the negative experience of Argentina and the positive ones for the rest of the countries “should serve to be an incentive both for the sovereign debtor as well as private creditors to believe in voluntary negotiation and good faith.”

For now, the Argentine case is pure uncertainty: if the country will appeal a negative sentence or if it could “dodge” a technical default by changing the jurisdiction of bonds under New York law. Somethingthe IIF doesn’t think would be easy.

Banqueros globales advierten sobre el riesgo de perdonar a la Argentina

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American Task Force Argentina

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12-105(L) 12-109 (CON), 12-111 (CON), 12-157 (CON), 12-158 (CON), 12-163 (CON), 12-164 (CON), 12-170 (CON), 12-176 (CON), 12-185 (CON), 12-189 (CON), 12-214 (CON), 12-909 (CON), 12-914 (CON), 12-916 (CON), 12-919 (CON), 12-920 (CON), 12-923 (CON), 12-924 (CON), 12-926 (CON), 12-939 (CON),

12-943 (CON), 12-951 (CON), 12-968 (CON), 12-971 (CON)

In the

United States Court of Appeals for the Second Circuit NML CAPITAL, LTD., AURELIUS CAPITAL MASTER, LTD., ACP MASTER, LTD., BLUE

ANGEL CAPITAL I LLC,

(caption continued on inside cover) Plaintiffs-Appellees,

-v.-

REPUBLIC OF ARGENTINA, Defendant-Appellant.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

AMICUS CURIAE BRIEF OF DUANE MORRIS INDIVIDUAL PLAINTIFFS GIANFRANCO AGOSTINI, ALFREDO PELLI AND GRAZIELLA BERCHI,

MILENA AMPALLA (continued on inside cover)

Anthony J. Costantini Rudolph J. Di Massa, Jr. Suzan Jo Mary C. Pennisi Duane Morris LLP 1540 Broadway New York, New York 10036 Tel: (212) 692-1000 Counsel for Duane Morris Individual Plaintiffs


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AURELIUS OPPORTUNITIES FUND II, LLC, PABLO ALBERTO VARELA, LILA INES

BURGUENO, MIRTA SUSANA DIEGUEZ, MARIA EVANGELINA CARBALLO, LEANDRO

DANIEL POMILIO, SUSANA AQUERRETA, MARIA ELENA CORRAL, TERESA MUNOZ DE

CORRAL, NORMA ELSA LAVORATO, CARMEN IRMA, LAVORATO, CESAR RUBEN

VAZQUEZ, NORMA HAYDEE GINES, MARTA AZUCENA VAZQUEZ, OLIFANT FUND, LTD.,


—v.—

THE REPUBLIC OF ARGENTINA,

Defendant-Appellant,

THE BANK OF NEW YORK MELLON, AS INDENTURE TRUSTEE, EXCHANGE BONDHOLDER GROUP,

Non-Party Appellants,

EURO BONDHOLDERS,

Non-Party Intervenors

DUANE MORRIS INDIVIDUAL PLAINTIFFS CONTINUED: ANDREA BONAZZI AND MIRCO MASINA AND LUCA VITALI, ANGELO COTTONI AND

BRUNA MATTIOLI, ANGELO LEONI AND RACHELE BONTEMPI, ANGIOLINO FUSATO

AND GABRIELE FUSATO AND ANNA STORCHI, ANTONELLA BACCHIOCCHI, ALBERTO

BACIUCCO, OTELLO BACIUCCO, FILIPPO BAGOLIN, SARA BARTOLOZZI, ANNELIESE

GUNDA BECKER, GIORGIO BENNATI, STUDIO LEGALE BENNATI, ROBERTO

BERARDOCCO, ORSOLINA BERRA, ADRIANO BETTINELLI, MASSIMO BETTONI, GRAZIELLA BONADIMAN, STEFANIA BONPENSIERE, EMANUELE BOTTI, BRUNO

CALMASINI AND TARCISIA DALBOSCO, BRUNO PAPPACODA AND LUISELLA

GUARDINCERRI, ITALIA CAMATO, ITALIA CAMATO, VINCENZO CARBONE, CARIFIN

S.A., CARLO AND SUSANNA BRETTI, GIOVANNI CARLOTTA, CARMELINA CENSI, CESARINO CONSOLINI AND AGOSTINO CONSOLINI, CLAUDIO MANGANO AND


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MARITZA LENTI, ALBERTO COMPARE, AGOSTINO CONSOLINI, GIANCARLO

BARTOLOMEI CORSI, LAURA COSCI, ALDO DAVID, AUGUSTO ARCANGELI DE FELICIS, CARLA MARINI ARCANGEL DE FELICIS, ADRIANA DELL'ERA, DIEGO CASTAGNA AND

EUFROSINA DE STEFANO, CARLO FARIOLI, FERNANDA ANGELA LOVERO AND

SABRINA PARODI, ANNA FERRI, FRANCESCO FOGGIATO, FRANCESCO CORSO AND

GIUSEPPINA CORSO, FRANCESCO MAURO GHEZZI AND MARIA LUIGIA CONTI, FRANCO TRENTIN AND STEFANIA TRENTIN, FRANCESCO MAURO GHEZZI, GIAN

CARLO GANAPINI AND LAURA ANNA CAPURRO, GIAN FRANCESCO CERCATO AND

BARBARA RICCHI, GIORGIO BENNATI AND CARLA MORATA, GIORGIO BISTAGNINO

AND EUGENIA RE, GIOVANNI BOTTI AND MARIA ZILIANI, GIOVANNI GIARDINA

AND VINCENZA SABATELLI, GIUSEPPE SILVIO ROSSINI AND MARINELLA SCALVI, CELESTINO GOGLIA, GRAZIANO ADAMI AND MONICA CROZZOLETTO, GIANFRANCO

GUARINI, GUGLIELMINA MASSARA AND MARTINO VERNA, RAIMONDO

IALLONARDO, INNOVAMEDICA S.P.A., PAOLO LISI, SERGIO LOVATI, MADDALENA

GAIOLI AND FELICINA GAIOLI, CARMELO MAIO, MANUELA DE ROSA

KUNDERFRANCO AND GIOVANNA CONNENA AND ANTONELLA DE ROSA

KUNDERFRANCO, MARCELLO CALANCA AND ELETTRA CASALINI, MARCO BORGRA

AND DONATELLA FRAGONARA ZANOTTI, MARCO BORGRA AND SERGIO BORGRA, MARCO CAVALLI AND VALERIA TOSO, ELIDE MARGNELLI, MARIA RITA MORETTO

AND UGO LORENZI, MARIO GIACOMETTI AND VERNA GUALANDI, MARIO VICINI

AND GIUSEPPINA CAPEZZERA, ROMANO MARTON, MATTEO AND GIOVANNI

ZANICHELLI, SALVATORE MELCHIONDA, MIRCO MASINA AND ANDREA BONAZZI, SIMONETTA MONTANARI, ALESSANDRO MORATA, AMATO MORI, CLAUDIO MORI, FRANCO PEZZE, FRANCO PEZZE, VALERIO PIACENZA, PERI LUIGI LUCIBELLO PIANI,

ALEESSANDRA REGOLI, SILVIA REGOLI, RENATA BOSCARIOL AND GIAMPAOLO

MONTINO, RINALDO FRISINGHELLI AND GRAZIELLA DACROCE, MARIA ROBBIATI, PAOLA ROSA, ADRIANO ROSATO, LAURA ROSSINI, INES ROTA, RUGGERO ROSSINI

AND ANTONIETTA GIUSEPPINA BRIOSCHI, RUGGERO ROSSINI AND ANTONIETTA

GIUSEPPINA BRIOSCHI AND RAFFAELE ROSSINI, HILDA RUPPRECHT, SANTE STEFANI

AND ANGELINA SALMISTRARO, MAURIZIO SERGI, SILVANA CORATO AND GIULIA

GREGGIO, SIMONA STACCIOLI, LICIA STAMPFLI-ROSA, STEFANO BISTAGNINO AND

FELICINA GAIOLI, RENATE TIELMAN, TIZIANO SASSELLI AND GIOVANNA FERRO, MANUELITO TOSO, MAURO TOSO, MARIO VICINI AND VITO ZANCANER

Amicus Curiae


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TABLE OF CONTENTS

PRELIMINARY STATEMENT ..................................................................................................... 1

THE REPUBLIC’S “PROPOSAL” FAILS TO ADDRESS THE COURT’S QUESTIONS AND DOES NOTHING TO MAKE HOLDOUT BONDHOLDER’S WHOLE ........................ 2

THE COURT SHOULD REJECT THE REPUBLIC’S PROPOSAL ............................................ 6


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ii DM3\2517211.1

TABLE OF AUTHORITIES

Cases

NML Capital Ltd. v. Republic of Argentina, 699 F.3d 246 (2d Cir. 2012) ........... 1, 4-6

NML Capital Ltd. v. Republic of Argentina, Docket No. 12-105(L), Dkt. # 903, at 1 (2d Cir. Mar. 1, 2013) ........................................................................... 1

NML Capital Ltd. v. Republic of Argentina, Docket No. 12-105(L), Dkt. # 935 (2d Cir. Mar. 29, 2013) .................................................................................. 2


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PRELIMINARY STATEMENT

This Court has already held that the Republic violated the pari passu

clause of the 1994 FAA when it made payments to the Exchange Bondholders,

and when it passed the Lock Law (legislation which remains in force). NML

Capital Ltd. v. Republic of Argentina, 699 F.3d 246, 259-260 (2d Cir. 2012).

The only question is the determination of the appropriate scope of the remedy

available for the Republic’s violation.

Given the Republic’s recalcitrant attitude, one may wonder why the

Republic wastes this Court’s time by submitting a proposal that purportedly

mirrors the offers previously rejected by the holdouts. One may also wonder

why the Republic continues to avail itself of the protections of our courts, all the

while publicly stating that: it has no intention of complying with orders of the

Court with which it disagrees; and as recently as March 31, 2013, reiterating its

disdain for our courts by restating its intention to pay Exchange Bondholders

“no matter what[.]”1

In its post-argument Order of March 1, this Court directed the Republic to

“submit in writing to the court the precise terms of any alternative payment 1 See Declaration of Suzan Jo, dated April 22, 2013 (hereinafter “Jo

Decl.”), Ex. B (Katia Porzecanski, New York-for-Buenos Aires Swap Theory Spreads: Argentina Credit, BLOOMBERG NEWS, Apr. 03, 2013, available at http://www.bloomberg.com/news/print/2013-04-03/new-york-for-buenos-aires-swap-theory-spreads-argentina-credit.html).


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formula and schedule to which it is prepared to commit.” See NML Capital Ltd.

v. Republic of Argentina, Docket No. 12-105(L), Dkt. # 903, at 1 (2d Cir. Mar.

1, 2013). Specifically, the Court directed the Republic to indicate:

(1) how and when it proposes to make current those debt obligations on the original bonds that have gone unpaid over the last 11 years; (2) the rate at which it proposes to repay debt obligations on the original bonds going forward; and (3) what assurances, if any, it can provide that the official government action necessary to implement its proposal will be taken, and the timetable for such action.

Id. at 2.

THE REPUBLIC’S “PROPOSAL” FAILS TO ADDRESS THE COURT’S QUESTIONS AND DOES NOTHING TO MAKE HOLDOUT

BONDHOLDER’S WHOLE

The Court was very specific on the first piece of information it wanted:

“how and when [the Republic] proposes to make current those debt obligations

on the original bonds that have gone unpaid over the last 11 years.” Id. at 2.

In its proposal, the Republic simply ignores this part of the Court’s

directive: it says that it will pay nothing on account of interest that accrued

during the first two years (2001-2003) after the Republic’s default. See NML

Capital Ltd. v. Republic of Argentina, Docket No. 12-105(L), Dkt. # 935 (2d

Cir. Mar. 29, 2013). As to the remaining years, the Republic states that it will

not “make current those debt obligations on the original bonds that have gone

unpaid over the last 11 years.” Id. at 1, 3-4 (emphasis added). Instead, the


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Republic says it will pay interest to the holdouts at rates specified in the

Exchange Bonds, not the original Bonds. Id.

The Republic’s proposal sets forth two “Options” for the holdout

bondholders: the “Par Option” and the “Discount Option.” Id. at 2-4. To further

dilute the attractiveness of its proposal, the Republic limits the Par Option to

$50,000 per series, despite its recognition that “[T]he Par option is designed for

individual bondholders . . . .”2 Id. at 3. Moreover, this Par Option offer is

limited to paying interest only for the period during which the current holder

actually held the bonds: this additional limitation allows the Republic to (a)

“self-forgive” its obligation to pay some accrued payment, and (b) ignore the

Court’s directive that the Republic explain how interest would be paid on the

original bonds. In short, the Republic has ignored this Court’s March 1 Order

by taking the position that it will only make a lump-sum payment of a small

fraction of indebtedness accumulated during eleven years of unilaterally-

2 Individual bondholders who have more than $50,000 in “Eligible

Amount” (a category including many retirees) would be forced to take the “Discount Option,” further reducing the lump-sum cash payments made available to the holdouts. As a consequence, the $50,000 limitation would deprive many retirees of a significant cash payment they badly need.


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imposed non-payment.3 This deficiency is reason enough to reject the

Republic’s Proposal.

The Republic explains that its proposal, with respect to the past due

payments, matches the amounts paid to the Exchange Bondholders. Id. at 4-5,

7-8, 11, 13, 15. Since it purports to treat all bondholders equally, the Republic

reasons that the pari passu requirement will be fulfilled.

Given not only the Republic’s violations of the pari passu clause, but also

its dogged long-term defiance of the courts of the United States, there is no

reason why any retroactive remedy should be limited by terms to which the

Exchange Bondholders have agreed. Retroactively, the only sensible resolution

is a lump-sum payment of all interest and principal that has accrued and become

due and payable in eleven years to all the current holders of the holdout bonds

(hereinafter, the “Accrued Payment Component”). Such a payment would be

directed in the form of an order for specific performance, which this Court has

3 The scope of the Republic’s proposal is limited to the plaintiffs in this

action (who are a sub-set of the holdouts). This Court specifically directed that the Proposal address all the holdout bonds, and this directive was ignored as well.


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5 DM3\2517211.1

endorsed as the appropriate remedial device. NML Capital Ltd., 699 F.3d at

261-262.4

After ignoring the Court’s first directive, Argentina then proceeds to

ignore the Court’s second directive. The Court directed the Republic to specify

“the rate at which it proposes to repay debt obligations on the original bonds

going forward.” See NML Capital Ltd., Dkt. # 903, at 2. This Court’s

acceptance of Argentina’s proposal would do nothing more than cancel the

original bonds and force the Exchange bonds on all the holdouts, who would be

effectively subjected to a judicial cram-down. This portion of the Republic’s

proposal ignores the fact that this Court specifically recognized the right of

individual holders to reject the Republic’s penny-ante exchange offers.5

4 The Republic may fear that a voluntary payment exceeding the amount

paid to the Exchange Bondholders would trigger other litigation by the Exchange Bondholders. An involuntary payment ordered by the courts would not.

5 Argentina’s flagrant disregard of U.S. courts has not gone unnoticed. The Institute of International Finance (IIF), which is comprised of the major banks of the world, has remarked that “Argentina finds itself in this complicated situation by its own behavior, evidenced by more than a decade of unilateral treatment of its creditors.” See Jo Decl., Ex. C (Mariana Shaalo, Argentina vs. Holdouts: Moody’s Minimizes Impact of Litigation with Vultures and Recalls that the Swap was Unilateral and Coercive, AMERICAN TASK FORCE ARGENTINA, Apr. 10, 2013, available at http://www.atfa.org/argentina-vs-holdouts-moodys-minimizes-impact-of-litigation-with-vultures-and-recalls-that-the-swap-was-unilateral-and-coercive/). The IIF also commented that the determination of the remedy


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With respect to the Accrued Payment Component, the Republic should be

ordered that immediately. With respect to the future component, the Proposal is

not responsive to the Court’s request, and should be rejected.

On this Court’s final question, “what assurances, if any, [the Republic]

can provide that the official government action necessary to implement its

proposal will be taken, and the timetable for such action,” (NML Capital Ltd.,

Dkt. # 903, at 2) the Republic devotes a three-sentence paragraph in which it

mouths principles of democratic government (NML Capital Ltd., Dkt. # 935, at

2). The Republic appears to be avoiding a direct answer here as well, and its

virtual disregard of the “timetable” requirement is remarkable. The holdouts,

and this Court, are entitled to a much more considered response after eleven

years of contentious litigation and outright evasion by the Republic.

THE COURT SHOULD REJECT THE REPUBLIC’S PROPOSAL

In short, the Republic has ignored, avoided, or evaded each one of this

Court’s requirements. There is no real choice but to reject the Proposal. The

question is the extent, if any, that the district court’s order should be modified.

“should be done carefully to not condone the unilateral actions by a sovereign debtor and weaken the rights of subsequent creditors, especially the right to demand reparations in court.” See Jo Decl., Ex. D (Veronica Dalto, Global Bankers Warn About The Risk of Pardoning Argentina, AMERICAN TASK FORCE ARGENTINA, Apr. 5, 2013, available at http://www.atfa.org/global-bankers-warn-about-the-risk-of-pardoning-argentina/).


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Respectfully Submitted, DUANE MORRIS LLP

By: s/Anthony J. Costantini

Anthony J. Costantini E-mail: [email protected] Rudolph J. Di Massa, Jr. Email: [email protected] Suzan Jo E-mail: [email protected] Mary C. Pennisi Email: [email protected] 1540 Broadway New York, NY 10036-4086 Telephone: +1 212 692 1000 Fax: +1 212 692 1020 Attorneys for Duane Morris Plaintiffs


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motion to file amicus - duane morris

Documents

pari passu clause

antonietta giuseppina brioschi

duane morris llp

francesco mauro ghezzi

republics recalcitrant attitude

pari passu requirement

ante exchange offers

voluntary payment exceeding