Argentina continues to search for a tenable position in its war with the hedge funds it's due to pay about $1.65 billion by July 30, under rulings affirmed earlier this month by the U.S. Supreme Court.
Late last week, after previously suggesting that it would be open to negotiations with the hedge funds to avert a default on its restructured debt, Argentina deposited about $530 million with the Bank of New York Mellon to pay exchange bondholders, seemingly in defiance of U.S. court orders, then threatened to bring an action in The Hague against the United States and U.S. District Judge Thomas Griesa of Manhattan for violating international law.
On Friday [June 27], at the latest hearing in this mess, Griesa refused to grant Argentina a stay of the injunction requiring it to pay the hedge funds at the same time it pays exchange bondholders. He told BNY Mellon to return the $530 million deposit from Argentina, which he said was an "improper" violation of his orders. (Argentina said it is caught between competing Argentine and U.S. legal directives.)
Griesa, who has twice returned from vacation to preside over emergency hearings in the last two weeks, was so impatient with Argentina's brinkmanship that he also on Friday finally threatened contempt of court for anyone who attempts to evade his injunctions.
But Griesa once again seemed to go out of his way to spare Argentina's lawyers at Cleary Gottlieb Steen & Hamilton from his ire. As I've reported in previous columns, the holdoutNML Capital has specifically targeted Cleary along with its client, arguing that the law firm advised Argentina on a plan to shift payments to exchange bondholders out of the reach of U.S. courts, and then misrepresented Argentina's intentions to both the U.S. Supreme Court and Judge Griesa.
NML counsel Robert Cohen of Dechert kept up that drumbeat on Friday, again arguing to Griesa that Cleary had made assurances to the judge that had not panned out. Cleary had assured Griesa that Argentina wouldn't violate his orders, but Argentina promptly did, Cohen said.
'Fair and Square'
Griesa wasn't buying it. He chided Argentina's lawyer Carmine Boccuzzi of Cleary for requesting a stay in letters to him rather than in a formal motion, but in the same breath complimented Boccuzzi and Cleary partner Jonathan Blackman on their skills. More significantly, he said later in the hearing that he has no problem with the actions of the Cleary lawyers.
"I want to say this to Mr. Boccuzzi and Mr. Blackman," Griesa said. "I've had trouble, and I've expressed it, with the Republic. But both of you have been fair and square in every way before me, and I appreciate that."
The Argentina debacle won't be solved before next week at the earliest. Despite Griesa's urging, Argentine officials still have not sat down for talks with the hedge funds and the Griesa-appointed special master. On Monday, NML senior portfolio manager Jay Newman issued his first public statement on the crisis: "NML is at the table, ready to talk, but Argentina has refused to negotiate any aspect of this dispute," he said. "There are no negotiations under way, there have been no negotiations, and Argentina refuses to commit to negotiations in the future. Argentina's government has chosen to put the country on the brink of default. We sincerely hope it reconsiders this dead-end path."
I'm sure that Cleary's priority right now is Argentina's imminent default, not Judge Griesa's regard for the firm. But it must be nice for the firm to know that the judge doesn't hold Cleary responsible for its client's defiance.
A Cleary spokeswoman declined to comment.
The opinions expressed here are those of the author, a columnist for Reuters.