Buzcat v. the Republic of Argentina

Full title: ELVIRA DAGMAR BUZCAT, et al. Plaintiffs, v. THE REPUBLIC OF ARGENTINA…

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

Date published: Aug 9, 2006

04 Civ. 7056 (TPG) (S.D.N.Y. Aug. 9, 2006)

Opinion

04 Civ. 7056 (TPG).

August 9, 2006

OPINION

THOMAS GRIESA, Senior District Judge

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 two agreements: (1) a Fiscal Agency Agreement dated October 19, 1994 (the "1994 FAA") and (2) a Floating Rate and Bond Exchange Agreement dated December 6, 1992 (the "FRB Agreement"). 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 and Section 6.07 of the FRB Agreement 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. Both 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 FRB Agreement permits 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 August 20, 2004, 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 held by plaintiffs 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 plaintiffs.¹

1 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 each plaintiff's beneficial interests in bonds.

Table 1.

Plaintiff Beneficial Owner: Face Value: CUSIP No., ISIN No., BB No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Dates Of Purchase: Acceleration: Contract Documents: Evidence of Ownership Proffered: Ramon Barbeito and Lidia Fernandez de Barbeito U.S. $ 413,000.00 CUSIP No. 040114ANO; ISIN No. US04114ANO2 Not provided. October 9, 2006. 11 % Between July 20, 1999 and January 20, 2000; between April 14, 2000 and November 1, 2000; between February 27, 2001 and May 4, 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Certification from Caja de Valores dated June 2, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 2.

Plaintiff 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: Elvira Dagmar Buzcat U.S. $ 32,000.00 CUSIP No. 040114AR1; ISIN No. US04114AR16 Not provided. January 30, 2017. 11.375 % On or about November 30, 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Certification from Caja de Valores dated June 14, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 3.

Plaintiff 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: : Elvira Dagmar Buzcat U.S. $ 10,000.00 CUSIP No. 040114GF1; ISIN No. US04114GF14 December 19, 2001. December 19, 2008. 7 % On or about November 30, 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Certification from Caja de Valores dated June 14, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 4.

Plaintiff 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: Mercedes Calvo [and Carmen Mata de Calvo (deceased)] U.S. $ 53,000.00 CUSIP No. 040114AN0; ISIN No. US04114ANO2 Not provided. October 9, 2006. 11 % Between March 14, 2000 and March 28, 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Certification from Caja de Valores dated June 7, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 5.

Plaintiff 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: : Alejandro Barbeito Fernandez and Laura Analia Munoz U.S. $ 28,000.00 CUSIP No. 040114ANO; ISIN No. US04114ANO2 Not provided. October 9, 2006. 11 % Between July 21, 1999 and July 27, 2000. August 20, 2004. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Certification from Caja de Valores dated June 3, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 6.

Plaintiff 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: : Isabel Gobbi U.S. $ 35,600.00 CUSIP No. 040114AZ3; ISIN No. US04114AZ32 Not provided. December 4, 2005. 11% Between November 9, 2001 and December 11, 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statements from Smith Barney Citigroup dated May 31, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 7.

Plaintiff 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: : Isabel Gobbi U.S. $ 35,000.00 CUSIP No. 040114GA2; ISIN No. US040114GA27 None given. June 15, 2015 11.75 % Between November 9, 2001 and December 11, 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statements from Smith Barney Citigroup dated May 31, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 8.

Plaintiff 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: : Diego Pedro Peluffo and Leonidas Raul Bordigoni U.S. $ 175,000.00 (U.S. $ 98,000.00 still owed) CUSIP No. P04981CE7; ISIN No. XS0043120236 Not provided. March 31, 2005. Floating Interest Rate. On or about March 1996. N/A. FRB Agreement dated December 6, 1992. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statements from BankBoston dated April 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 9.

Plaintiff 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: : Property Protection, Inc. U.S. $ 326,000.00 (U.S. $ 182,560.00 still owed) CUSIP No. P04981CE7; ISIN No. XS0043120236 Not provided. March 31, 2005. Floating Interest Rate. On or about June 26, 2000. N/A. FRB Agreement dated December 6, 1992. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Pershing dated April 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 10.

Plaintiff 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: : Delfin Rabinovich and Maria Lucia Rojo U.S. $ 70,000.00 CUSIP No. 040114AV2; ISIN No. US040114AV28 None given. September 19, 2027 9.75 % Not provided. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Lehman Brothers dated April 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 11.

Plaintiff 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: Delfin Rabinovich and Maria Lucia Rojo U.S. $ 50,000.00 (U.S. $ 28,560.00 still owed) CUSIP No. P04981CE7; ISIN No. XS0043120236 Not provided. March 31, 2005. Floating Interest Rate. On or about November 10, 1997. N/A. FRB Agreement dated December 6, 1992. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Lehman Brothers dated April 30, 2005. (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: Isabel Ana Roberts U.S. $ 121,500.00 CUSIP No. 040114GF1; ISIN No. US040114GF14 December 19, 2001. December 19, 2008 7 % On or about May 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Smith Barney Citigroup dated May 31, 2005. (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: Isabel Ana Roberts U.S. $ 1,750,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009 11.75 % On or about May 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Smith Barney Citigroup dated May 31, 2005. (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: Isabel Ana Roberts U.S. $ 1,200,000.00 CUSIP No. 040114FC9; ISIN No. US040114FC91 None given. March 15, 2010. 11.375 % On or about May 2001. August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Smith Barney Citigroup dated May 31, 2005. (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: Oscar Secco U.S. $ 300,000.00 CUSIP No. 040114AN0; ISIN No. US040114ANO2 September 10, 1996. September 10, 2006. 11 % Between October 2000 and December 2000. Notice sent on August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Wachovia Securities dated April 30, 2005. (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: Oscar Secco U.S. $ 150,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009. 11.75 % Between October 2000 and December 2000. Notice sent on August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Wachovia Securities dated April 30, 2005. (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: Oscar Secco : U.S. $ 205,000.00 CUSIP No. 040114AR1; ISIN No. USO40114AR16 January 30, 1997. January 30, 2017. 11.375% Between October 2000 and December 2000. Notice sent on August 20, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Wachovia Securities dated April 30, 2005. (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 and the FRB Agreement. This has occurred in Lightwater, 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 plaintiff 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 they owned the beneficial interests as of November 2004. There is no evidence of any change of ownership thereafter.

CONCLUSION

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

Plaintiffs' motions for summary judgment are granted. Judgment will be entered for the principal amount of the bonds issued under the 1994 FAA plus accrued interest. With respect to the bonds issued under the FRB Agreement, 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 able to reach agreement on those subjects, they shall jointly submit an agreed proposed judgment to the court. If the parties are unable to reach agreement on those subjects, plaintiff shall submit a proposed judgment to the court, and the Republic shall submit any objections to a plaintiff's proposed judgment within five business days thereafter. The court will then resolve any remaining disagreements.

SO ORDERED.