Facundo Cabral

[from Brent Kendall @ Nasdaq, 22 February 2011]

US Supreme Court Rejects Argentina's Appeal Of Frozen Assets

WASHINGTON -(Dow Jones)- The U.S. Supreme Court on Tuesday rejected Argentina's challenge to a ruling that froze some of its U.S. assets in order to satisfy court awards to hedge funds seeking to collect on the country's defaulted bonds.

The high court, without comment, said it would not hear Argentina's appeal. The justices let stand a decision by 2nd U.S. Circuit Court of Appeals in New York, which last August affirmed the attachment of assets held in a New York account by the state-run commercial bank Banco de la Nacion Argentina.

Two funds that hold Argentina's defaulted bonds, Kenneth Dart's EM Ltd. fund and Elliott Management Corp's NML Capital Ltd., obtained attachment orders on the account in 2007. The funds said the account contains more than $70 million in assets.

The litigation stems from Argentina's 2001 default of billions of dollars in bonds. The funds said they have obtained more than $2.3 billion in judgments against Argentina in a New York federal court, which the country has refused to satisfy.

Argentina criticized the plaintiffs as "vulture funds" that bought the debt at discounted prices and then sought to impede the country's debt-restructuring efforts.

In 2005, the Argentine government offered about 33 cents on the dollar, and last year wrapped up a similar swap. Between the two swaps, investors have agreed to exchange about 91% of the defaulted bonds.

But investors that rejected the offers have consistently sought to seize Argentine assets in the U.S., Europe and Japan, thus preventing the country's return to overseas debt markets.

Argentina, in its brief to the U.S. Supreme Court, argued the New York appeals court followed the wrong legal rules when it allowed the funds to attach claims to the Argentine assets. The republic said the lower court should have applied the law of Argentina to the case, not the law of New York.

The case is Republic of Argentina v. Em Ltd, 10-572.