Argentina’s long-standing fight with activist hedge fund manager Paul Singer’s Elliot Capital Management might be taken to the Supreme Court. Today, the deadline for a court filing could pit Argentina and its legal representative, Paul Clement, who represented the U.S. government before the high court in George W. Bush’s second term, against Elliot, whose legal representative is Theodore Olson, who represented the U.S. government in Bush’s first term.
Appeal expected to Supreme Court today
Argentina is expected to appeal lower court decisions, which ordered it to pay bondholders after the 2002 default. The dispute between the government of Argentina and Elliot dates back to the country’s 2001 default on $80 billion in privately held debt. After defaulting, in 2005 the government offered bond holders, including Elliott, a deal worth approximately 27 cents on the dollar with upside tied to future growth. Nearly three quarters of investors took the deal, but Elliott was among the holdouts and Argentina has vowed not to re-issue the offer. Elliot, who has a long history of confrontation with Argentina over default on its debt, including attempting to repossess the Argentine president’s plane as it was refueling, has termed the Gramercy-led solution “beyond bizarre” and “impractical” in a letter to investors. As a result of default, Argentina’s peso dove in value relative to the U.S. dollar. In 2000 the peso was near par to the dollar but currently it takes eight pesos to trade for one dollar.
The ACAP Strategic Fund's managers see a "significant scarcity of attractive asset allocation choices globally," but also a strong environment for fundamental stock picking. Q2 2021 hedge fund letters, conferences and more According to a copy of the fund's second-quarter investor update, which ValueWalk has been able to review, its managers currently hold a balanced Read More
Argentina has engaged in what could be construed as a personal battle with Elliott. As reported in ValueWalk, when Elliott criticized Argentina for its ties with Iran, the sovereign nation lashed out at the hedge fund manager. Argentina’s President Cristina Fernandez de Kirchner called the Elliott campaign “unscrupulous” and “libelous,” blasting the hedge fund for the media campaign as “blackmail” of the country.
Lower court rejected Argentina’s rehearing bid
Last year the Supreme Court refused to take the case while the U.S. Second Circuit Court of Appeals was still considering it. Then last month, after the case reached a conclusion, the Supreme Court agreed to hear Argentina’s appeal of subpoenas issued by Elliott about the country’s assets.
The U.S. Second Circuit Court of Appeals had rejected Argentina’s bid for a rehearing and earlier in the year the court affirmed lower court rulings that ordered Argentina to pay the bondholders. As the threat of another government default swirls around Argentina, the court order bars the South American nation from making payments on its restructured debt without paying the bondholders first. Argentina has refused to pay the bond holders, calling Elliott and his fellow bondholders “vulture funds” because they refused to accept previous offers at a discount.