Arag-A Ltd. v. Republic of Argentina

178 F. Supp. 3d 192, 2016 U.S. Dist. LEXIS 49364, 2016 WL 1451586
CourtDistrict Court, S.D. New York
DecidedApril 12, 2016
Docket16-cv-2238 (TPG)
StatusPublished
Cited by2 cases

This text of 178 F. Supp. 3d 192 (Arag-A Ltd. v. Republic of Argentina) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Arag-A Ltd. v. Republic of Argentina, 178 F. Supp. 3d 192, 2016 U.S. Dist. LEXIS 49364, 2016 WL 1451586 (S.D.N.Y. 2016).

Opinion

OPINION

Thomas P. Griesa, United States District Judge

Plaintiffs are a group of holders of defaulted Argentine bonds.1 They claim to [194]*194have entered into binding settlement agreements with the Republic of Argentina on or before February 29, 2016. Plaintiffs believe the Republic must honor these alleged agreements before the court vacates the pari passu in junctions.

The Republic now moves to dismiss for failure to state a claim, while plaintiffs move for a temporary restraining order and a preliminary injunction. For the following reasons, the court grants the Republic’s motion to dismiss and denies plaintiffs’ motions for injunctive relief.

Background

1. The Settlement Documents

After years of refusing to settle with holders of its defaulted bonds, the Republic returned to the negotiation table in January 2016. On February 5, 2016, the Republic published a global settlement proposal, known as the “Propuesta.” The Propuesta outlined the settlement options open to holders of defaulted Argentine bonds. Although the Propuesta contained proposed terms of settlement, it did not precisely describe the settlement procedure.

On February 17, the Republic clarified the settlement procedure by publishing on its website “the procedures by which eligible holders ... may accept the terms” of the Propuesta. The Republic issued a set of three settlement documents: (1) the “Instructions for Bondholders to Accept its Settlement Proposal”; (2) a “Master Settlement Agreement”; and (3) an “Agreement Schedule.” These three documents, read together, detailed how holders could reach settlement agreements with the Republic.

The Instructions advised holders “wishing to accept the Republic’s proposal” to “proceed in accordance with the following [Instructions”:

Holders may become a party to a Settlement Agreement by executing and exchanging with the Republic a completed Agreement Schedule ....
The holder must provide the Republic with (i) the information about its bonds called for by the attachment to the form of Agreement Schedule contained in the Master Settlement Agreement and (ii) the holder’s calculation of the Settlement Amount for its bonds ....
The holder must complete, sign and send the Agreement Schedule to the Republic including the information set forth ... above. That Agreement Schedule, when countersigned by the Republic, shall constitute a binding agreement between the parties to settle all claims in respect of the bonds on the terms contained in the Master Settlement Agreement.

The Instructions also contained information about how to calculate the “Settlement Amount” for holders with pari passu injunctions. Those holders could elect a payment equal to the value of their judgment or claim, less a discount. The Instructions then outlined an “early-bird” incentive: “Holders that execute and deliver ... an Agreement Schedule prior to 5:00 pm New York time on February 19, 2016 will have the Settlement Amount ... calculated using a discount of 27.5%,” while holders that “execute and deliver” after that time “will have the Settlement Amount ... calculated using a discount of 30%.”

Next, the Master Settlement Agreement outlined the general terms that would apply to all settlement agreements executed through this procedure. It stated that an [195]*195agreement “is made ... between the Re.public of Argentina ... and the Holder identified in ... the Agreement Schedule signed by the parties in connection with this Agreement,” and that the “Agreement Schedule, when executed and exchanged by the Republic and the Holder,” would be “an integral part of this Settlement Agreement.” The document then clarified that the Agreement Schedule, to be effective, must be “completed ... [,] signed (and exchanged) by the Holder and the Republic,” and that New York law would- govern.

Finally, the Agreement Schedule provided a template that holders and the Republic would fill out to resolve and record each holder’s specific settlement information. As part of each Agreement Schedule, the parties were to agree on and enter a “Settlement Amount” — a figure to be “reconciled between the Republic and the Holder.” The Agreement Schedule then concluded as follows:

[[Image here]]

2. The Settlement Agreements

After the Republic published the Pro-puesta, it began to reach agreements to settle with' holders, both large and small. Some holders used the procedure published on the Republic’s website to execute and exchange with the Republic completed and countersigned Agreement Schedules.2 Others sought to add new terms to the Agreement Schedule or draft counterpro-posals from scratch.

At least two nonparty holders — Procella Holdings L.P. and VR Global Partners, L.P. — reached settlement agreements with the Republic despite adding a “rider” to their Agreement Schedules. The rider confirmed that “the Republic will not assert that the Holder’s claims to any Bonds listed thereon are untimely, or otherwise time-barred.” Am. Compl. Exs. 7-8. The Republic’s representatives reviewed these modified Agreement Schedules and then countersigned them.

Another nonparty holder — Honero— tried to add a rider to its Agreement Schedule. After Honero submitted a spreadsheet of its bond holdings on February 16, the Republic responded the next day with a link to the Master Settlement Agreement and wrote that it “did not find any issues” with Honero’s list of bonds. Am. Compl. ¶ 112. On February 18, Hone-ro returned the settlement documents to [196]*196the Republic but added a rider similar to Procella’s and VR’s. The Republic emailed Honero on February 19 to say that it would “be okay with the rider,” but a few days later , informed Honero that, after reviewing the calculations, the Republic believed Honero was “not taking into consideration the statu[te] of limitations.” Am. Compl. 1Í114. Honero then rescinded its prior submissions and emailed a second signed/Agreement Schedule that did not contain the rider. The Republic did not countersign either of Honero’s Agreement Schedules. See Am. Compl. ¶¶ 112-15. Like Honero, plaintiffs in this action emailed Agreement Schedules, signed by them, to the Republic by February 29. Although the Republic allegedly “acknowledged receipt” of these Agreement Schedules, it did not exchange countersigned versions with any plaintiff in this action. See Am. Compl. ¶¶ 79-100.3

3. The Indicative Ruling

■ After the Republic reached settlement agreements with several large holders not in this case, it moved to vacate the pari passu injunctions that this court had previously entered in sixty-two related actions. Because some of those actions were on appeal at the time, the Republic also sought an Indicative Ruling under Federal Rule of Civil Procedure 62.1 to allow the court to decide whether it would vacate the injunctions were the Second Circuit to remand for that purpose.

On February 19, the court issued its Indicative Ruling and explained that it would conditionally vacate the injunctions upon remand.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
178 F. Supp. 3d 192, 2016 U.S. Dist. LEXIS 49364, 2016 WL 1451586, Counsel Stack Legal Research, https://law.counselstack.com/opinion/arag-a-ltd-v-republic-of-argentina-nysd-2016.