Ferri v. the Republic of Argentina

Full title: ANNA FERRI et al., Plaintiffs, v. THE REPUBLIC OF ARGENTINA, Defendant

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

Date published: Aug 11, 2006

05 Civ. 2943 (TPG) (S.D.N.Y. Aug. 11, 2006)

Opinion

05 Civ. 2943 (TPG).

August 11, 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.

The motions are granted.

FACTS

The bond indebtedness at issue is governed by Fiscal Agency Agreements dated December 10, 1993 (the "1993 FAA") and October 19, 1994 (the "1994 FAA"). 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 20 of the 1993 FAA 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 FAAs 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.

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 March 10, 2005, plaintiffs sent notices to Bankers Trust Company, the Fiscal Agent of The Republic of Argentina, declaring the principal amounts of the debt securities 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 The following tables contain the necessary identifying information regarding each plaintiff's beneficial interests in bonds.

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).

Table 1.

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: Gianfranco Agostini U.S. $ 20,000.00 CUSIP No. 040114AN0; ISIN No. US040114AN02 September 10, 1996. September 10, 2006. 11% On or about September 16, 1998. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco di Sardegna S.p.A. dated September 30, 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: Gianfranco Agostini U.S. $ 10,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009. 11.75% On or about August 2, 1999. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco di Sardegna S.p.A. dated September 30, 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: Eduardo Argentieri U.S. $ 300,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017. 11.375% On or about December 7, 2004 and December 14, 2004. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Intesa dated September 30, 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: : Sara Bartolozzi U.S. $ 41,000.00 CUSIP No. 040114GD6; ISIN No. US040114GD65 None given. February 21, 2012 12.375% On or about November 12, 2004. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Cassa di Risparmi di Livorno dated November 17, 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: : Roberto Berardocco U.S. $ 95,000.00 CUSIP No. 040114FC9; ISIN No. US040114FC91 None given. March 15, 2010. 11.375% On or about November 23, 2004. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco di Credito Cooperativo Abruzzese dated November 17, 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: : Roberto Berardocco U.S. $ 90,000.00 CUSIP No. 040114GD6; ISIN No. US040114GD65 None given. February 21, 2012 12.375% On or about November 26, 2004 and December 14, 2004. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco di Credito Cooperativo Abruzzese dated November 17, 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: : Carlo Bretti, Maria Robbiati and Susanna Bretti U.S. $ 200,000.00 CUSIP No. 040114GD6; ISIN No. US040114GD65 None given. February 21, 2012 12.375 % On or about January 21, 2005. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from BNL dated September 30, 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: : Carlo Bretti, Maria Robbiati and Susanna Bretti U.S. $ 200,000.00 CUSIP No. 040114AH3; ISIN No. US040114AH34 December 20, 1993. December 20, 2003. 8.375 % On or about April 27, 1998 and February 28, 2001. March 10, 2005. FAA dated December 10, 1993. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from BNL dated September 30, 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: : Carlo Bretti, Maria Robbiati and Susanna Bretti U.S. $ 50,000.00 CUSIP No. 040114AN0; ISIN No. US040114AN02 September 10, 1996. September 10, 2006. 11 % On or about April 6, 1998. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca di Legnaro dated September 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: : Laura Victoria Demidovich, Alejandro Demidovich and Diego Walter Catrilli U.S. $ 49,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017. 11.375 % On or about May 7, 2001. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Certification from Caja de Valores dated December 14, 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: : Carlos Aldofo Escati U.S. $ 32,749.00 CUSIP No. 040114GF1; ISIN No. US040114GF14 December 19, 2001. December 19, 2008. 7 % August 3, 2001. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Caja de Valores dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 12.

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: : Anna Ferri U.S. $ 20,000.00 CUSIP No. 040114GD6; ISIN No. US040114GD65 None given. February 21, 2012 12.375 % On or about March 20, 2002. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco di Sardegna S.p.A. dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 13.

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: Giovanni Giardina and Vincenza Sabatelli EURO 10,000.00 CUSIP No. 008633347; ISIN No. XS0086333472 April 21, 1998. April 21, 2008. 8.125% November 26, 1999. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco di Sardegna S.p.A. dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 14.

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: Gabriel Federico Leimgruber and Federico Hector Leimgruber U.S. $ 100,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017. 11.375% Between October 2001 and December 2001. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Certification from Caja de Valores dated December 2, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 15.

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: Franco Pezze U.S. $ 54,000.00 CUSIP No. 040114GD6; ISIN No. US040114GD65 None given. February 21, 2012 12.375% November 10, 2004 March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Credito Artigiano dated October 20, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 16.

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: Armando Eduardo Valerio U.S. $ 25,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017 11.375% On or about July 11, 2001. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Caja de Valores dated September 30, 2005. (Account Statements; Letters; Notarized Statements, etc.)

Table 17.

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: Roque Perez Villalba and Mirta Antonia Portela U.S. $ 75,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017 11.375% On or about December 20, 2000, February 23, 2001 and March 27, 2001. March 10, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Certificate from Caja de Valores dated December 2, 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 FAAs. See Mazzini v. Republic of Argentina, No. 03 Civ. 8120, 2005 U.S. Dist. LEXIS 5692 (S.D.N.Y. Mar. 31, 2005). 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).

With regard to current ownership, plaintiffs have adequately demonstrated through their account statements that they owned the relevant beneficial interests as of various dates in 2005. There is no evidence of any change of ownership thereafter.

CONCLUSION

Plaintiffs' motions for summary judgment are granted. Judgment will be entered for the principal amount of the bonds plus accrued interest.

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 plaintiff's proposed judgment within five business days thereafter. The court will then resolve any remaining disagreements.

SO ORDERED.