A group of funds including legendary investor George Soros’ Quantum Partners LP and Hayman Capital’s Kyle Bass have filed suit with a UK judge, asking that he release $282 million worth of interest payments on their investment in Argentinian bonds, in the latest development in a fight with Paul Singer of Elliott Management.

Their lawyer Mark Hapgood said at a court hearing that they are “entitled to be paid their share” of the proceeds from the Euro-denominated bonds.

George Soros And Kyle Bass Battle It Out With Paul Singer In London Court

U.S. court ruling

A U.S. court ruled in 2012 that bondholders who did restructure their debt – like Bass and George Soros — can’t be paid until bondholders who didn’t restructure (holdouts, like hedge fund manager Paul Singe) are also paid. This ruling tipped Argentina into default on July 30th. When Buenos Aires tried to make a payment to restructured bondholders and not the holdouts, that payment was stopped by a U.S. court.

Ever since the U.S. court ruling, Buenos Aires has made attempts to shift the jurisdiction of the bonds from New York City to Buenos Aires, and has also tried to change the custodial bank in charge of payment distributions. However, the investors haven’t been paid to date.

George Soros and others arguments

Lawyer Mark Hapgood representing investors including George Soros, Kyle Bass said at a court ruling that the investors are “innocent third parties” in the dispute between Argentina and creditors who are refusing to participate in a restructuring deal.

Thanks to lawsuits filed by U.S. hedge funds led by Paul Singer’s Elliot Management, Argentina couldn’t recover from a 2001 default on debt totaling $80 billion. The hedge funds contend that they won’t take part in an agreement for creditors to accept losses of as much as 75%.

As reported earlier, Kyle Bass, founder of hedge fund Hayman Capital Management LP, and other investors including George Soros and his Quantum Partners LP have sued the account trustee, The Bank of New York Mellon Corporation (NYSE:BK) in London for failure to distribute interest payment of 226 million euros ($298 million) relating to Argentine sovereign debt. The group of investors involved in the lawsuit owns more than 1.3 billion euros of Argentina’s euro-denominated bonds.

In the meanwhile, Argentine President Cristina Kirchner wrote to Barack Obama on Friday to complain that the co-chairman of a group linked to hedge-fund holdouts from Argentina’s 2001 default also serves as head of a American Task Force Argentina, a lobbying group pushing to force the country to obey U.S. court rulings that it must pay the hedge funds.

In a letter to his hedge fund’s investors yesterday, Singer claimed that until the government makes the “appropriate move”, his company will “continue to enthusiastically pursue vigorous enforcement of our contractual rights, including following the trail of Argentine assets wherever it leads”.

Citing ValueWalk, Buenos Aires Herald reports Singer indicated Argentina can choose between having more assets at risk of seizure by international courts or accepting his group and New York District Judge Thomas Griesa’s demands, which would give the country “compelling and clear” benefits which are “ripe for the picking”.

In a recent letter to investors obtained by ValueWalk, Paul Singer stated:

The third quarter commenced with the Argentine government’s decision to default on the country’s obligations to exchange bondholders rather than negotiate a settlement with holders of its untendered bonds. This decision – while not unexpected given the country’s perpetual, vicious rhetoric and systemically poor treatment of its creditors – remains an appalling illustration of politicians putting perceived political self-interest over the welfare of the nation. Default was absolutely avoidable. Creditors suggested a range of monetary and non-monetary concessions at various stages in the process. But Argentine officials (directly and through their attorneys) dismissed each and every one out of hand, without any response other than repeated demands for an indefinite suspension of the judicial rulings we had won. Argentine officials even refused to sit in the same room with creditors until the day before the government took the country into default.

Not content with cheating creditors once again, Argentina intensified its defiance by making numerous egregious attempts to evade the court’s orders, prompting the presiding judge to hold Argentina in contempt. The judge reserved ruling on the scope of potential sanctions against the country, but those proceedings will be undertaken in the coming months.

In the meantime, we will continue our worldwide hunt for Argentine assets to satisfy our judgments. This effort was bolstered by the U.S. Supreme Court’s recent robust 7-1 decision to uphold the authority of U.S. courts to authorize extensive discovery of information about a sovereign debtor’s assets.

The Argentine government’s decision to default and then violate the court’s orders is sadly consistent with its treatment of numerous other creditors and business partners and has resulted in significant negative repercussions for the local economy. Argentina’s peso has reached record lows against the dollar; at this moment, the official exchange rate is 8.45:1, while the unofficial rate is nearly 16:1. Argentina cannot access global financial markets and capital flight has accelerated. The country’s borrowing costs are amongst the highest in the world, putting an enormous economic burden on its businesses, citizens, provinces, cities and the Argentine government. In light of the obvious benefits that a settlement would bring to all of these constituents, many investors expect the government to enter negotiations with creditors in January 2015, once the Rights Upon Future Offers (RUFO) clause of the exchange bonds expires. However, in the past, many people have predicted that Argentina would take a turn towards “rational” behavior only to see officials in Buenos Aires continue in the same radical and self-destructive decision-making.

There is an alternative, of course, and the consequences for Argentina would be “day versus night.” Negotiating a resolution of its creditor disputes would have electrifying and instantaneous benefits for the country’s economy. Unfettered access to international capital markets would allow Argentina’s government, its provinces and its businesses to refinance debt at substantially lower interest rates. The deterioration of the currency would be reversed as dollars flowed into the country. Foreign investors would immediately be eager to explore the funding of Argentina’s significant undeveloped energy and mineral resources. The economy would flourish. These benefits are compelling and clear, and they are “ripe for the picking” anytime President Kirchner chooses to make the appropriate move. In the meantime, however, we will continue to enthusiastically pursue vigorous enforcement of our contractual rights, including by following the trail of Argentine assets wherever it leads.

A spokesperson for Elliott declined to comment.