Argentina ruling calls halt to holdout litigation

Author: | Published: 1 Jun 2005

Argentina finally began its record-breaking debt exchange last month after a US appeal court ruling released several billion dollars in defaulted bonds. In doing so, the court enabled the largest restructuring in history to go ahead after weeks of delay, and arguably signed a death warrant for pre-exchange lawsuits by holdout creditors.

At the start of the year Argentina offered creditors on its more than $100 billion in debt approximately 30 cents for each dollar they were owed. Seventy-six percent of them agreed to the exchange, believing it was the best offer they were likely to receive. But creditors representing almost $25 billion in debt rejected the deal. Among these holdout creditors were several who opted to take Argentina to court in the hope of securing a higher return than the exchange offer.

Since Argentina defaulted on its debts in 2001 a series of creditors have taken the government...