U.S. judge orders Argentina to pay creditors $1.3 billion

Nathan Andrada – Fourth Estate Cooperative Contributor

New York, NY, United States (4E) – Argentina was angered by the decision of a U.S. court ordering the government to pay $1.3bn to hedge fund creditors.

Argentina’s economic minister Hernán Lorenzino told reporters in a press conference that awarding payment to “the vulture funds” is illegal and described U.S. District Judge Thomas Griesa’s ruling as “unfair”.

The favorable ruling for several hedge funds has sparked concerns that that Argentina could be headed to another crippling sovereign debt default, and threatens to make any future government restructurings difficult to achieve.

Describe as a key trial for sovereign debt restructurings, Judge Griesa ordered Argentina to pay the hedge fund creditors including Aurelius Capital and Elliott Associates when it also needs to pay its bondholders.

Both Aurelius Capital and Elliott Associates did not accept the restructuring package in 2005 and 2010 unlike most of the country’s creditors. Instead they pursued legal remedies to obtain full payments.

Lorenzino said that the government will submit a revision request on Monday to review the ruling.

The appeals court has yet to confirm the decision and there is the likelihood that the matter could reach up to the U.S. Supreme Court.

If the decision is upheld, it could mean countries may no longer have the same immunity against creditors, which they have enjoyed over the last century.

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