Opinion
05 Civ. 177 (TPG).
August 3, 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 three 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"), and (3) 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, Section 20 of the 1993 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. All three 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 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 December 3, 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 and 1993 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.
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 Beneficial Owner: Lorenzo BianchiFace Value: U.S. $ 30,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GD6; ISIN No. US040114GD65 No.: Date Of Issuance: None given.
Date Of Maturity: February 21, 2012
Interest Rate/Payable: 12.375 %
Date Of Purchase: On or about April 1, 2004.
Acceleration: Notice sent December 3, 2004.
Contract Documents: FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Banca Agricola Proffered: Mantovana dated October 31, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 2.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB CUSIP No. 040114AZ3; ISIN No. US04114AZ32 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Account statement from Banco Aleman Platina Proffered: : Financing Services International Corporation ("Fiseico") U.S. $ 225,000.00 Not provided. December 4, 2005. 11% On or about August 10, 2000. Notice sent December 3, 2004. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) dated October 31, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 3.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB CUSIP No. 040114AH3; ISIN No. US04114AH34 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Account statement from Banco Aleman Platina Proffered: : Financing Services International Corporation ("Fiseico") U.S. $ 300,000.00 Not provided. December 20, 2003. 8.375 % On or about February 23, 2001. Notice sent December 3, 2004. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certificates, etc.) dated October 31, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 4.
Plaintiff Beneficial Owner: Agostino ConsoliniFace Value: U.S. $ 8,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GD6; ISIN No. US040114GD65 No.: Date Of Issuance: None given.
Date Of Maturity: February 21, 2012
Interest Rate/Payable: 12.375 %
Date Of Purchase: On or about June 4, 2004.
Acceleration: Notice sent December 3, 2004.
Contract Documents: FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from CARISBO SanPaolo Proffered: dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 5.
Plaintiff Beneficial Owner: Agostino Consolini and Cesarino ConsoliniFace Value: U.S. $ 75,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GD6; ISIN No. US040114GD65 No.: Date Of Issuance: None given.
Date Of Maturity: February 21, 2012
Interest Rate/Payable: 12.375 %
Date Of Purchase: On or about June 4, 2004.
Acceleration: Notice sent December 3, 2004.
Contract Documents: FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from CARISBO SanPaolo Proffered: dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 6.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB CUSIP No. 040114AH3; ISIN No. US04114AH34 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Account statement from Credit Suisse Private Proffered: : Ensenada United Corporation U.S. $ 110,000.00 Not provided. December 20, 2003. 8.375 % On or about October 23, 2001. Notice sent December 3, 2004. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certificates, etc.) Banking dated October 10, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 7.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB CUSIP No. 040114AH3; ISIN No. US04114AH34 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Account statement from UBS dated September Proffered: : Romi Fishmann and Chava Rebecca Fischmann U.S. $ 210,000.00 Not provided. December 20, 2003. 8.375 % On or about August 7, 2001. Notice sent December 3, 2004. FAA dated December 10, 1993. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 8.
Plaintiff Beneficial Owner: Mario Giacometti and Verna GualandiFace Value: U.S. $ 130,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GD6; ISIN No. US040114GD65 No.: Date Of Issuance: None given.
Date Of Maturity: February 21, 2012
Interest Rate/Payable: 12.375 %
Date Of Purchase: On or about June 4, 2004.
Acceleration: Notice sent December 3, 2004.
Contract Documents: FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from CARISBO SanPaolo Proffered: dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 9.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB CUSIP No. 040114AZ3; ISIN No. US04114AZ32 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Certification from Caja de Valores dated Proffered: : Edith Elvira Nicolas and Paula Armanda Azcarate U.S. $ 93,000.00 Not provided. December 4, 2005. 11% Between June 1, 1999 and October 10, 2000 and on or about May 29, 2001. Notice sent December 3, 2004. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) November 15, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 10.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB ISIN No. XS0043120236; CUSIP No. P04981CE7 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Account statement from Zurcher Kantonalbank Proffered: : Lerinerco S.A. U.S. $ 110,000.00 Not provided. March 31, 2005. Floating Interest Rate. Not provided. N/A. FRB Agreement dated December 6, 1992. (FAA; Indenture; Offering Prospectus; Certificates, etc.) as of October 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 11.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB CUSIP No. 040114AR1; ISIN No. US040114AR16 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Account statement from Zurcher Kantonalbank Proffered: : Lerinerco S.A. U.S. $ 70,000.00 January 30, 1997. January 30, 2017 11.375 % On or about October 2001. Notice sent December 3, 2004. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) as of October 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 12.
Plaintiff Beneficial Owner Face Value: CUSIP No., ISIN No., BB CUSIP No. 040114GF1; ISIN No. US040114GF14 No.: Date Of Issuance: Date Of Maturity: Interest Rate/Payable: Date Of Purchase: Acceleration: Contract Documents: Evidence of Ownership — Account statement from Zurcher Kantonalbank Proffered: : Lerinerco S.A. U.S. $ 110,000.00 December 19, 2001. December 19, 2008 7 % On or about October 2001. Notice sent December 3, 2004. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) as of October 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)Table 13.
Plaintiff Beneficial Owner: Hilda RupprechtFace Value: U.S. $ 70,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AN0; ISIN No. US040114AN02 No.: Date Of Issuance: September 10, 1996.
Date Of Maturity: September 10, 2006.
Interest Rate/Payable: 11 %
Date Of Purchase: On or about February 20, 2001.
Acceleration: Notice sent December 3, 2004.
Contract Documents: FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Banca Popolare di Proffered: Sondrio dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 14.
Plaintiff Beneficial Owner: Hilda RupprechtFace Value: U.S. $ 70,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114ABE9; ISIN No. No.: US040114BE93
Date Of Issuance: April 7, 1999.
Date Of Maturity: April 7, 2009
Interest Rate/Payable: 11.75 %
Date Of Purchase: On or about June 28, 2001.
Acceleration: Notice sent December 3, 2004.
Contract Documents: FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Banca Popolare di Proffered: Sondrio dated September 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, the 1993 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 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 they owned the beneficial interests as of September and October 2005. 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 1993 FAA and 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, plaintiffs shall submit a proposed judgment to the court, and the Republic shall submit any objections to plaintiffs' proposed judgment within five business days thereafter. The court will then resolve any remaining disagreements.
SO ORDERED.