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From Securities Regulation Daily, April 15, 2016

Panel upholds district court order vacating Argentina injunctions

By Mark S. Nelson, J.D.

A Second Circuit panel issued a summary order letting stand U.S. District Judge Thomas Griesa’s decision to lift injunctions against the Republic of Argentina. The case arose from bondholders’ legal efforts to collect after the country defaulted. But the appeals court said Judge Griesa should attempt to verify that Argentina has met the several conditions he imposed when the country certifies its compliance with his prior order (Aurelius Capital Master, Ltd. v. Republic of Argentina, April 15, 2015, per curiam).

The Second Circuit concluded that the district court did not abuse its discretion by lifting the injunctions, subject to the conditions that Argentina repeal any laws holding up a settlement and that any plaintiffs who settled prior to a February court order be paid according to those agreements. The question then became one of whether the injunctions, subject to these conditions, had served their purpose. They had.

All told, the changed circumstance of Argentina’s good faith efforts to settle the case after a change in the county’s leadership, coupled with the district court’s mulling the public interest, including the rights of certain exchange bondholders and the economic welfare of Argentina and its citizens, supported the order vacating the injunctions.

As a practical matter, the appeals panel said any individual bondholders can still try to settle their claims without an injunction, and they could still pursue litigation. Moreover, the district court can impose a new injunction if future circumstances warrant that action. But the panel opted to sidestep an argument lodged by lead plaintiff Aurelius Capital Master, Ltd. about possible future events that may justify keeping the injunctions in place because a decision by the court now would be no more than an advisory opinion.

The Second Circuit twice before affirmed district court orders in the case, albeit with some modifications. The latest activity in the matter grew out of the district court’s February indicative ruling and its March order finding it would be inequitable and detrimental to the public interest to maintain the injunctions.

The case is No. 16-628(L).

Attorneys: Roy T. Englert, Jr. (Robbins, Russell, Englert, Orseck, Untereiner & Sauber LLP) for Aurelius Capital Master, Ltd. and Blue Angel Capital I LLC. Andrea Boggio (Smithfield, Rhode Island) for Andrarex, Ltd. Paul D. Clement (Bancroft PLLC) for Republic of Argentina.

Companies: Aurelius Capital Master, Ltd.; NML Capital, Ltd.

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