Appellate Victory Ordering Republic of Argentina to Turn Over $312 Million in Cash

The Firm is pleased to announce that it achieved a significant victory on behalf of a group of clients who hold several hundred million dollars in judgments against Argentina related to bonds that have been in default since 2001.  Argentina, a notorious recalcitrant debtor, steadfastly refused to satisfy those judgments for years. In 2021, during ongoing efforts to identify attachable assets, the Firm became aware that Argentina still held an interest in certain USD and DMK collateral securing the so-called “Brady Bonds” that Argentina issued in the early 1990s.  Publicly available information suggested that the Brady Bonds were overcollateralized, meaning that once the Brady Bonds matured and Bondholders were paid in March 2023, there would be some collateral left over for the clients to attach and execute upon.  

            However, the funds were not immediately attachable because the USD and DMK collateral, which was held in the name of the Federal Reserve Bank in accounts in New York and Germany, didn’t belong to Argentina yet, and would not be transferred to Argentina until the Brady Bonds matured and the Brady Bondholders were paid.  Additionally, as soon as the funds were released to Argentina, they would immediately be transferred back to Argentina’s Central Bank and out of the reach of creditors.  

            The Firm devised a solution to seek attachment of Argentina’s reversionary interest in the collateral (i.e., its contractual right under the Brady Bonds’ terms to receive repayment after the Brady Bondholders were paid in full).  The team went into the Southern District of New York seeking an ex parte order of attachment and District Court Judge Preska ruled in our favor from the bench and awarded the USD attachment, and required the Federal Reserve Bank to disclose the exact amount held.  The attachment order was later expanded to specifically include Argentina’s reversionary interest in an additional $50 million in collateral held in DMKs.  

            Argentina appealed from the orders attaching the reversionary interest in both the USD and DMK collateral and the matters were heard in a consolidated appeal before the Second Circuit Court of Appeals.  On August 21, 2024, the appellate court issued its opinion, affirming the attachment orders.  By this point, the Brady Bonds had matured and cash collateral of over $300 million was frozen at the Federal Reserve Bank and available to our clients.  This opinion guarantees the clients will receive over $300 million in cash to satisfy their judgments against Argentina.