Rossini v. the Republic of Argentina

Full title: LAURA ROSSINI et al., Plaintiffs, v. THE REPUBLIC OF ARGENTINA and THE…

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

Date published: Aug 22, 2006

05 Civ. 6200 (TPG) (S.D.N.Y. Aug. 22, 2006)

Opinion

05 Civ. 6200 (TPG).

August 22, 2006

OPINION

THOMAS GRIESA, Senior District Judge

Plaintiffs are the beneficial owners of certain bond indebtedness issued by defendants The Republic of Argentina and The Province of Buenos Aires (hereinafter referred to jointly as the "Republic"). 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) 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 and Section 113(c) of the Indenture all 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 1998 Indenture 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 June 30, 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.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 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:

Cesar Civetta, Amanda Wieliwis and Aldo Civetta : U.S. $ 15,000.00 CUSIP No. 040114AZ3; ISIN No. US04114AZ32 December 4, 1998. December 4, 2005. 11% On or about June 11, 2001. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from UBS as of February 28, 2006. (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: Cesar Civetta, Amanda Wieliwis and Aldo Civetta : U.S. $ 20,000.00 CUSIP No. 040114FC9; ISIN No. US040114 FC91 None given. March 15, 2010. 11.375% On or about October 16, 2002. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from UBS as of February 28, 2006. (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: Modern Group S.A. : U.S. $ 50,000.00 CUSIP No. 040114GF1; ISIN No. US040114GF14 December 19, 2001. December 19, 2008 7% On or about December 2, 2000 and December 21, 2004. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from UBS as of February 28, 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: Lucabras S.A. : U.S. $ 15,000.00 CUSIP No. 040114AZ3; ISIN No. US04114AZ32 December 4, 1998. December 4, 2005. 11% On or about June 11, 2001. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Raymond James Global as of February 28, 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: Lucabras S.A. U.S. $ 20,000.00 CUSIP No. 040114FC9; ISIN No. US040114 FC91 None given. March 15, 2010. 11.375% On or about October 16, 2002. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Raymond James Global as of February 28, 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: Simonetta Montanari : U.S. $ 37,000.00 CUSIP No. 040114GH7; ISIN No. US040114GH79 None given. June 19, 2031 12% On or about May 9, 2005. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco Popolare Commercio e Industria dated June 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: Simonetta Montanari : EURO 95,000.00 CUSIP No. 008633347; ISIN No. XS0086333472 April 21, 1998. April 21, 2008. 8.125 % On or about November 17, 1999. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca di Piacenza dated June 30, 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: Simonetta Montanari : EURO 13,000.00 ISIN No. XS0124395129 Not provided. February 24, 2003. 10.375% On or about March 2 and May 3, 2001. N/A. Indenture dated July 8, 1998. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco Popolare Commercio e Industria dated June 30, 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: Claudio Mori : U.S. $ 504,000.00 CUSIP No. 040114GH7; ISIN No. US040114GH79 None given. June 19, 2031 12 % On or about May 4, 2005. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco Popolare Commercio e Industria dated June 30, 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: Claudio Mori : EURO 8,000.00 CUSIP No. 008633347; ISIN No. XS0086333472 April 21, 1998. April 21, 2008. 8.125% On or about November 17, 1999. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco Popolare Commercio e Industria dated June 30, 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: Claudio Mori : EURO 15,000.00 ISIN No. XS0124395129 Not provided. February 24, 2003. 10.375% On or about March 2 and May 3, 2001. N/A. Indenture dated July 8, 1998. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banco Popolare Commercio e Industria dated June 30, 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: Alfredo Pelli and Graziella Berchi : U.S. $ 24,000.00 CUSIP No. 040114GD6; ISIN No. US040114GD65 None given. February 21, 2012 12.375% On or about March 11, 2005. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Popolare di Novara dated April 30, 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: Giuseppe Silvio Rossini and Marinella Scalvi U.S. $ 13,000.00 CUSIP No. 040114AH3; ISIN No. US040114AH34 December 20, 1993. December 20, 2003. 8.375% Prior to December 1, 2001. Notice sent on June 30, 2005. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca del Gottardo as of April 18, 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: Giuseppe Silvio Rossini and Marinella Scalvi U.S. $ 150,000.00 CUSIP No. 040114AZ3; ISIN No. US04114AZ32 December 4, 1998. December 4, 2005. 11% Prior to December 1, 2001. Notice sent on June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statemens from SANPAOLO IMI and Banca del Gottardo as of February 28, and April (Account Statements; 18, 2006, respectively. 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: Giuseppe Silvio Rossini and Marinella Scalvi U.S. $ 67,000.00 CUSIP No. 040114AN0; ISIN No. US040114AN02 September 10, 1996. September 10, 2006. 11% Prior to December 1, 2001. Notice sent on June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from SANPAOLO IMI as of February 28, 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: Giuseppe Silvio Rossini and Marinella Scalvi : U.S. $ 50,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009. 11.75% Prior to December 1, 2001. Notice sent on June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from SANPAOLO IMI as of February 28, 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: Giuseppe Silvio Rossini and Marinella Scalvi : U.S. $ 55,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017. 11.375% Prior to December 1, 2001. Notice sent on June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca del Gottardo as of April 18, 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: Laura Rossini : U.S. $ 13,000.00 CUSIP No. 040114AH3; ISIN No. US040114AH34 December 20, 1993. December 20, 2003. 8.375% On or about March 24, 2000. Notice sent June 30, 2005. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Banca Intesa dated June 30, 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: Ruggero Rossini, Antonietta Giuseppina Brioschi : and Raffaele Rossini U.S. $ 17,000.00 CUSIP No. 040114AH3; ISIN No. US040114AH34 December 20, 1993. December 20, 2003. 8.375% Prior to December 1, 2001. Notice sent June 30, 2005. FAA dated December 10, 1993. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Sao Paolo dated February 28, 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: Ruggero Rossini, Antonietta Giuseppina Brioschi : and Raffaele Rossini U.S. $ 8,000.00 CUSIP No. 040114AN0; ISIN No. US040114AN02 September 10, 1996. September 10, 2006. 11% Prior to December 1, 2001. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Sao Paolo dated February 28, 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: Ruggero Rossini, Antonietta Giuseppina Brioschi : and Raffaele Rossini U.S. $ 153,000.00 CUSIP No. 040114BE9; ISIN No. US040114BE93 April 7, 1999. April 7, 2009. 11.75% Prior to December 1, 2001. Notice sent June 30, 2005. FAA dated October 19, 1994. (FAA; Indenture; Offering Prospectus; Certificates, etc.) — Account statement from Sao Paolo dated February 28, 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: Diego Fabian Topf and Ines Delia Eidelman U.S. $ 130,000.00 CUSIP No. 040114AR1; ISIN No. US040114AR16 January 30, 1997. January 30, 2017. 11.375% On or about April 2001. Notice sent June 30, 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 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: Diego Fabian Topf and Ines Delia Eidelman U.S. $ 100,000.00 CUSIP No. 040114BC3; ISIN No. US040114BC38 Not provided. February 25, 2019. 12.125% On or about September 2000. Notice sent June 30, 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.)

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 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 2006. There is no evidence of any change of ownership thereafter.

CONCLUSION

The motion to strike defendants' 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 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 able 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.