Opinion
No. 05 Civ. 4246 (TPG).
February 17, 2006
OPINION
Plaintiff funds 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. Plaintiff is suing to recover amounts due to it as a result of the default and has moved for summary judgment.
The motion is 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 April 21, 2005, plaintiffs sent notices to Deutsche Bank Trust Company Americas (the successor 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. The following tables contain the necessary identifying information regarding plaintiff's beneficial interests in bonds.
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: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $ 5,950,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AZ3 No.:Date Of Issuance: Not provided.
Date Of Maturity: December 4, 2005.
Interest Rate/Payable: 11%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 2.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $ 14,410,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GF1 No.:Date Of Issuance: Not provided.
Date Of Maturity: December 19, 2008.
Interest Rate/Payable: 15.5%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 3.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $6,000,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114BE9 No.:Date Of Issuance: Not provided.
Date Of Maturity: April 7, 2009.
Interest Rate/Payable: 11.75%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 4.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $3,000,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114FC9 No.:Date Of Issuance: Not provided.
Date Of Maturity: March 15, 2010.
Interest Rate/Payable: 11.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 5.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $9,875,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GD6 No.:Date Of Issuance: Not provided.
Date Of Maturity: February 21, 2012.
Interest Rate/Payable: 12.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 6.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $2,250,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GA2 No.:Date Of Issuance: Not provided.
Date Of Maturity: June 15, 2015.
Interest Rate/Payable: 11.75%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 7.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $1,000,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AR1 No.:Date Of Issuance: Not provided.
Date Of Maturity: January 30, 2017.
Interest Rate/Payable: 11.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 8.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $3,855,976.00
CUSIP No., ISIN No., BB CUSIP No. 040114GG9 No.:Date Of Issuance: Not provided.
Date Of Maturity: June 19, 2018.
Interest Rate/Payable: 12.25%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 9.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $200,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114FB1 No.:Date Of Issuance: Not provided.
Date Of Maturity: February 1, 2020.
Interest Rate/Payable: 12%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 10.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $9,850,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GH7 No.:Date Of Issuance: Not provided.
Date Of Maturity: June 19, 2031.
Interest Rate/Payable: 12%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 11.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $6,365,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AH3 No.:Date Of Issuance: Not provided.
Date Of Maturity: December 20, 2049.
Interest Rate/Payable: 8.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 12.
Plaintiff Beneficial Owner: Greylock Global Distressed Debt Master Fund Ltd.Face Value: U.S. $3,050,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AX8 No.:Date Of Issuance: Not provided.
Date Of Maturity: April 10, 2005.
Interest Rate/Payable: 8.726%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 13.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 3,750,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AX8 No.:Date Of Issuance: Not provided.
Date Of Maturity: April 10, 2005.
Interest Rate/Payable: 8.726%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 14.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 14,450,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AZ3 No.:Date Of Issuance: Not provided.
Date Of Maturity: December 4, 2005.
Interest Rate/Payable: 11%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 15.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 27,700,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GF1 No.:Date Of Issuance: Not provided.
Date Of Maturity: December 19, 2008.
Interest Rate/Payable: 15.5%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 16.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 22,600,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114BE9 No.:Date Of Issuance: Not provided.
Date Of Maturity: April 7, 2009.
Interest Rate/Payable: 11.75%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 17.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 18,350,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114FC9 No.:Date Of Issuance: Not provided.
Date Of Maturity: March 15, 2010.
Interest Rate/Payable: 11.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 18.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 10,200,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GD6 No.:Date Of Issuance: Not provided.
Date Of Maturity: February 21, 2012.
Interest Rate/Payable: 12.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 19.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $4,100,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GA2 No.:Date Of Issuance: Not provided.
Date Of Maturity: June 15, 2015.
Interest Rate/Payable: 11.75%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 20.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 15,300,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AR1 No.:Date Of Issuance: Not provided.
Date Of Maturity: January 30, 2017.
Interest Rate/Payable: 11.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 21.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 9,925,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GG9 No.:Date Of Issuance: Not provided.
Date Of Maturity: June 19, 2018.
Interest Rate/Payable: 12.25%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 22.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 2,500,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AV2 No.:Date Of Issuance: Not provided.
Date Of Maturity: September 19, 2027.
Interest Rate/Payable: 9.75%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 23.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 16,800,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114GH7 No.:Date Of Issuance: Not provided.
Date Of Maturity: June 19, 2031.
Interest Rate/Payable: 12%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 2005. (Account Statements; Letters; Notarized Statements, etc.)
Table 24.
Plaintiff Beneficial Owner: Greylock Global Opportunity Master Fund Ltd.Face Value: U.S. $ 14,259,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114AH3 No.:Date Of Issuance: Not provided.
Date of Maturity: December 20, 2049.
Interest Rate/Payable: 8.375%
Date Of Purchase: Not provided.
Acceleration: April 21, 2005.
Contract Documents: 1993 FAA or 1994 FAA. (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)
Evidence of Ownership — Account statement from Bear Stearns dated Proffered: July 29, 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. Here, Bear Stearns Security Corp., plaintiffs' broker, obtained authorization to sue from Cede Co., the holder of the bonds at issue. Bear Stearns in turn granted permission to sue to plaintiffs.
With regard to current ownership, plaintiffs have adequately demonstrated through its account statements that owned the relevant beneficial interests as of July 29, 2005. There is no evidence of any change of ownership thereafter. Acceleration of Principal
The Republic argues that plaintiff has not effected acceleration of the principal, as it claims to have done. The Republic argues that acceleration of principal can only occur at the behest of holders of 25% or more of the principal amount of securities of a series. This is incorrect. Under Paragraph 12 of the FAA, where a default in the payment of interest or a default by declaring a moratorium occurs, "each holder" may give notice and declare principal due and payable immediately, and such notice will cause the acceleration unless the default has been cured or other conditions have been fulfilled, which are not relevant here.
CONCLUSION
Plaintiffs' motion for summary judgment is 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 unable 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.