EuroResource--Deals And Debt - January 2014

For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current developments.

Recent Developments

Global—On 10 January 2014, the US Supreme Court agreed to resolve a court split over the scope of discovery orders aimed at enforcing judgments against foreign states. In Argentina v. NML Capital, Ltd., No. 12-842, 2014 BL 7274 (Jan. 10, 2014), the Supreme Court granted a petition for a writ of certiorari to hear an appeal stemming from Argentina's default on its government debt in 2001. Argentina restructured its defaulted debt in 2005 and 2010. One of the holdout bondholders from those restructurings, NML Capital, filed 11 federal lawsuits in New York to collect on its defaulted bonds. The Cayman Island hedge fund has since been awarded judgments totaling approximately US$2.5 billion. The US Court of Appeals for the Second Circuit upheld a lower court's order forcing two banks, as part of NML's effort to enforce the judgments, to disclose information concerning assets Argentina owns outside the US. See EM Ltd. v. Republic of Argentina, 695 F.3d 201 (2d Cir. 2012). This ruling, however, put the Second Circuit at odds with three of its sister circuits, which have limited post-judgment discovery to assets located within the US, in accordance with their interpretation of the Foreign Sovereign Immunities Act. See Rubin v. Islamic Republic of Iran, 637 F.3d 783 (7th Cir. 2011), cert. denied, 133 S. Ct. 23 (2012); Af-Cap, Inc. v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080 (9th Cir. 2007); Conn. Bank of Commerce v. Republic of Congo, 309 F.3d 240 (5th Cir. 2002). The Supreme Court will likely hear arguments in April.

In a related dispute, Argentina is expected by mid-February 2014 to appeal to the Supreme Court a ruling by the Second Circuit (NML Capital, Ltd. v. Republic of Argentina, 727 F.3d 230 (2d Cir. 2013)) upholding a lower court's order directing Argentina to pay holdout bondholders US$1.33 billion.

Refer to previous editions of EuroResource ( here, here and here) for additional information regarding the Argentine debt restructuring dispute.

US, UK and CanadaOn 7 January 2014, the US Bankruptcy Court for the District of Delaware signed an order approving the "milestone" deal reached on 17 December 2013 between Nortel's US division, its European creditors and representatives of British pensioners settling some of the "costly and contentious litigation" that has been...