From Casetext: Smarter Legal Research

Botti v. the Republic of Argentina

United States District Court, S.D. New York
Aug 24, 2006
05 Civ. 8687 (TPG) (S.D.N.Y. Aug. 24, 2006)

Opinion

05 Civ. 8687 (TPG).

August 24, 2006


OPINION


Plaintiffs are the beneficial owners of certain bond indebtedness issued by defendant The Republic of Argentina. The Republic defaulted on such indebtedness in December 2001 during a profound fiscal crisis. Plaintiffs are suing to recover amounts due to them as a result of the default and have moved for summary judgment. Plaintiffs also move to strike the Republic's discovery requests.

The motions are granted.

FACTS

The bond indebtedness at issue is governed by one of four agreements: (1) a Fiscal Agency Agreement dated October 19, 1994 (the "1994 FAA"), (2) a Fiscal Agency Agreement dated December 10, 1993 (the "1993 FAA"), (3) a Floating Rate and Bond Exchange Agreement dated December 6, 1992 (the "FRB Agreement"), and (4) an Indenture dated July 8, 1998 (the "1998 Indenture"). The 1994 FAA is the same agreement that governed the bond indebtedness on which this court granted summary judgment to the plaintiffs in Lightwater Corporation Ltd. v. Republic of Argentina, No. 02 Civ. 3804, 2003 WL 1878420 (S.D.N.Y. Apr. 14, 2003). Section 22 of the 1994 FAA, Section 20 of the 1993 FAA, Section 6.07 of the FRB Agreement and Section 113(c) of the Indenture state that the Republic waives sovereign immunity and consents to jurisdiction in any state or federal court in the borough of Manhattan in the City of New York. All four agreements provide that the Republic's obligations on the bonds are unconditional and that failure to make any payment of principal or interest for 30 days after the applicable payment date constitutes an event of default. A declaration by the Republic of a moratorium on the payment of principal or interest on its public external indebtedness is an event of default as well. Paragraph 12 of the 1994 FAA provides for acceleration of principal if there is a failure to pay interest or a moratorium. If either of these events occurs,

each holder of Securities and such Series may by such notice in writing declare the principal amount of Securities of such Series held by it to be due and payable immediately. . . .

The 1993 FAA contains similar language.

The FRB Agreement and the 1998 Indenture both permit acceleration of principal only by holders of at least 25% in aggregate of the outstanding principal amount of the bonds under each agreement.

On December 24, 2001 the Republic declared a moratorium on payments of principal and interest on the external debt of the Republic. The court refers to its previous opinions for a description of the circumstances of these defaults. Lightwater, 2003 WL 1878420, at *2; Applestein v. Republic of Argentina, No. 02 Civ. 1773, 2003 WL 1990206, at *1 (S.D.N.Y. Apr. 29, 2003). On October 7, 2005, plaintiffs sent notices to Bankers Trust Company, the Fiscal Agent of The Republic of Argentina, declaring the principal amounts of the debt securities governed by the 1994 FAA and 1993 FAA held by each plaintiff to be immediately due and payable.

The bonds that are the subject of this action are listed hereafter. Also listed are the amounts of the beneficial interests owned by each plaintiff.

The court notes the distinction between bonds and beneficial interests. In some previous opinions, the court has simply referred to the plaintiffs as owners of "bonds," when in fact plaintiffs are technically owners of "beneficial interests in bonds." The Republic actually issues "a bond" to a depository. The depository, in some form, issues "participations" to brokers, who sell "beneficial interests" to purchasers. These beneficial interests are identified by reference to the underlying bond (CUSIP or ISIN number or both; date of issuance and maturity; rate of interest) and the principal amount of the beneficial interest. This distinction is discussed more fully in Million Air Corp. v. Republic of Argentina, No. 04 Civ. 1048, 2005 U.S. Dist. LEXIS 23904 (S.D.N.Y. Oct. 17, 2005).

The following tables contain the necessary identifying information regarding plaintiffs' beneficial interests in bonds.

Table 1.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Emanuele Botti : U.S. $ 32,000.00 CUSIP No. 040114GH7; ISIN No. US040114GH79 None given. June 19, 2031. 12% On or about June 6, 2005. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Popolare Commercio e Industria dated December 31, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 2.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Giovanni Botti and Maria Ziliani : EURO 28,000.00 ISIN No. XS0124395129 Not provided. February 24, 2003. 10.375% Prior to December 31, 2001. None given. Indenture dated July 8, 1998. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statements from Banca Popolare Commercio e Industria dated December 31, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 3.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Maria Agustina Sauco : U.S. $ 5,000.00 CUSIP No. 040114AH3; ISIN No. US040114AH34 December 20, 1993. December 20, 2003. 8.375 % On or about January 28, 2005. Notice sent October 7, 2005. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Certificate from Caja de Valores dated May 26, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 4.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Silvio Eduardo Schuster, Rivka Schmuskovits de : Schuster, Nicolas Schuster, and Flavia Marina Schuster U.S. $ 950,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017 11.375% Prior to December 31, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Lehman Brothers dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 5.

Plaintiff Bond Holder or Beneficial Owner: Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Miguel Kaufmann U.S. $ 70,000.00 CUSIP No. 040114ANO; ISIN No. US040114AN02 September 10, 1996. September 10, 2006. 11% On or about February 1, 2001 and April 19, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from UBS as of April 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 6.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Alberto Baciucco : U.S. $ 90,000.00 CUSIP No. 040114BC3; ISIN No. US040114BC38 Not provided. February 25, 2019. 12.125 % Prior to December 31, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Cassa di Risparmio di Foligno S.p.A. dated April 30, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 7.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Otello Baciucco : U.S. $ 110,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009. 11.75% On or about June 15 and July 18, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Fideuram dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 8.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Otello Baciucco : U.S. $ 100,000.00 CUSIP No. 040114GA2; ISIN No. US040114GA27 None given. June 15, 2015 11.75% On or about June 15 and July 18, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Fideuram dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 9.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Otello Baciucco : U.S. $ 100,000.00 CUSIP No. 040114BC3; ISIN No. US040114BC38 Not provided. February 25, 2019. 12.125% On or about June 15 and July 18, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Fideuram dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 10.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Otello Baciucco : EURO 50,000.00 ISIN No. XS0124395129 Not provided. February 24, 2003. 10.375% On or about July, 2001. None given. Indenture dated July 8, 1998. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Fideuram dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 11.

Plaintiff Bond Holder or Beneficial Owner: Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Edgardo A. Ramos and Beatriz Leonor de Ramos U.S. $ 186,000.00 CUSIP No. 040114ANO; ISIN No. US040114ANO2 September 10, 1996. September 10, 2006. 11 % Prior to December 31, 2001. Notice sent on October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Merrill Lynch dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 12.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Edgardo A. Ramos and Beatriz Leonor de Ramos : U.S. $ 228,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009. 11.75%. Prior to December 31, 2001. Notice sent on October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Merrill Lynch dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 13.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Edgardo A. Ramos and Beatriz Leonor de Ramos : U.S. $ 231,000.00 CUSIP No. 040114AH3; ISIN No. US040114AH34 December 20, 1993. December 20, 2003. 8.375% Prior to December 31, 2001. Notice sent on October 7, 2005. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Merrill Lynch dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 14.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Elena Pasquali : U.S. $15,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009 11.75% On or about February 23, 2004. Notice sent on October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from Banca di Roma dated March 31, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 15.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Portico Capital Inc. : U.S. $ 470,00.00 CUSIP No. 04114AR1; ISIN No. US040AR16 January 30, 1997. January 30, 2017. 11.375% On or about March 24, 2001, April 24, 2001, November 21, 2001, and January 16, 2004. Notice sent on October 7, 2005. FAA dated Octoer 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from UBS dated May 10, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 16.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Portico Capital Inc. : U.S. $ 470,000.00 ISIN No. XS0043120236 Not provided. March 31, 2005. Floating Interest Rate. On or about October 30 and November 1, 2001. N/A. FRB Agreement dated December 6, 1992. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from UBS dated May 10, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 17.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Corleis S.A. : U.S. $ 150,000.00 CUSIP No. 040114AN0; ISIN No. US040114AN02 September 10, 1996. September 10, 2006. 11% On or about February 11, 2004. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from IDB Bank dated May 9, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 18.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Corleis S.A. : U.S. $ 100,000.00 CUSIP No. 040114BE9' ISIN No. US040114BE93 April 7, 1999. April 7, 2009 11.75% On or about February 11, 2004. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from IDB Bank dated May 9, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 19.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Corleis S.A. : U.S $350,000.00 CUSIP No. 040114AZ3' ISIN No. US04114AZ32 December 4, 1998. December 4, 2005. 11% On or about February 11, 2004. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from IDB Bank dated May 9, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 20.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Corleis S.A. : U.S. $ 90,000.00 CUSIP No. 040114GA2; ISIN No. US040114GA27 Not given. June 15, 2015 11.75% On or about February 11, 2004. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from IDB Bank dated May 9, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 21.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Corleis S.A. : U.S. $ 920,000.00 CUSIP No. 040114AH3; ISIN No. US040114AH34 December 20, 1993. December 20, 2003. 8.375% On or about February 11, 2004. Notice sent October 7, 2005. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from IDB Bank dated May 9, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 22.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Norberto ANgel Garcia Madeo, Graciela Candida : Saenz, and Ana Maria Saenz U.S. $ 57,000.00 CUSIP NO. 040114gd6; ISIN No. US040114GD65 Not given. February 21, 2012 12.375% Prior to December 31, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from Citibank dated April 19, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 23.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Norberto Angel Garcia Madeo, Graciela Candida : Saenz, and Ana Maria Saenz U.S $ 26,000.00 CUSIP No. 040114GA2; ISIN No. US040114GA27 Not given. June 15, 2015 11.75% Prior to December 31, 2001. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from Citibank dated April 19, 2006. (Account Statements; Letters; Notarized Statements, etc.)

Table 24.

Plaintiff Bond Holder or Beneficial Owner Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Jorg Zahn : U.S. $ 100,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017 11.375% On or about November 3, 2003. Notice sent October 7, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certifications, etc.) — Account statement from Dresdner Bank dated April 30, 2006. (Account Statements; Letters; Notarized Statements, etc.)

DISCUSSION

This Court has already granted summary judgment in other cases to plaintiffs seeking to collect on the Republic's defaulted bonds issued under the 1994 FAA, the 1993 FAA, the FRB Agreement and the 1998 Indenture. This has occurred in Lightwater, supra, Applestein, supra, Mazzini v. Republic of Argentina, No. 03 Civ. 8120, 2005 U.S. Dist. LEXIS 5692 (S.D.N.Y. Mar. 31, 2005), and other cases. Only certain specific issues need to be discussed in connection with the present motion.

Standing and Proof of Ownership

In the two opinions in Fontana v. Republic of Argentina, 415 F.3d 238 (2d Cir. 2005), and Applestein v. Province of Buenos Aires, 415 F.3d 242 (2d Cir. 2005), the Second Circuit has held that an owner of a beneficial interest, such as plaintiffs here, must receive authorization from the registered holder of the bond before it may sue, but that such authorization may be granted subsequent to the filing of a lawsuit. Alternatively, the Republic may waive the authorization requirement.

The Republic has agreed to waive objections based on lack of authorization where the court makes a finding of current ownership. See Transcript, March 28, 2006, Cilli v. Republic of Argentina (04 Civ. 6594).

Here, plaintiffs have adequately demonstrated through their account statements that owned the beneficial interests as of various dates in 2005 and 2006. There is no evidence of any change of ownership thereafter.

CONCLUSION

The motion to strike defendant's discovery requests is granted.

The motions for summary judgment are granted. Judgment will be entered for the principal amount of the bonds plus accrued interest. With respect to the bonds issued under the FRB Agreement and the 1998 Indenture, judgment will be entered for any payments on those bonds that are due and unpaid as of the time of judgment.

The parties shall consult with one another concerning the form of the judgment and the amounts of interest that should be awarded in the judgment. If the parties are unable to reach agreement on those subjects, they shall jointly submit an agreed proposed judgment to the court. If the Republic and any plaintiff are unable to reach agreement on those subjects, that plaintiff shall submit a proposed judgment to the court, and the Republic shall submit any objections to that plaintiff's proposed judgment within five business days thereafter. The court will then resolve any remaining disagreements.

SO ORDERED.


Summaries of

Botti v. the Republic of Argentina

United States District Court, S.D. New York
Aug 24, 2006
05 Civ. 8687 (TPG) (S.D.N.Y. Aug. 24, 2006)
Case details for

Botti v. the Republic of Argentina

Case Details

Full title:EMANUELE BOTTI et al., Plaintiffs, v. THE REPUBLIC OF ARGENTINA, Defendant

Court:United States District Court, S.D. New York

Date published: Aug 24, 2006

Citations

05 Civ. 8687 (TPG) (S.D.N.Y. Aug. 24, 2006)