Case 16-658, Document 116, 03/25/2016, 1736787, …/media/Files/Services/Argentine... · Ramon...

16-628(L) 1 6-639(CON), 1 6-640(CON), 16-641 (CON), 1 6-642(CON), 1 6-643(CON), 1 6-644(CON), 16-649(CON), 16-650(CON), 16-651(CON), 16-653(CON), 16-657(CON), 16-658(CON), 1 6-659(CON), 1 6-660(CON), 16-661 (CON), 1 6-662(CON), 1 6-664(CON), 1 6-665(CON), 1 6-666(CON), 1 6-667(CON), 1 6-668(CON), 1 6-669(CON), 1 6-670(CON), 16-671 (CON), 1 6-672(CON), 1 6-673(CON), 1 6-674(CON), 1 6-675(CON), 1 6-677(CON), 1 6-678(CON), 16-681(CON), 16-682(CON), 16-683(CON), 1 6-684(CON), 1 6-685(CON), 1 6-686(CON), 16-687(CON), 16-688(CON), 16-689(CON), 1 6-690(CON), 16-691 (CON), 1 6-694(CON),

1 6-695(CON), 1 6-696(CON), 16-697(CON), 16-698(CON)

IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

AURELIUS CAPITAL MASTER, LTD., ACP MASTER, LTD.,

Plaintiffs-Appellants, V.

THE REPUBLIC OF ARGENTINA,

Defendant-Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

REPLY BRIEF FOR PLAINTIFFS-APPELLANTS RICARDO PONS et al.

"INDIVIDUAL BONDHOLDERS" (Full list of names and docket numbers appears on following pages)

Michael C. Spencer MILBERG LLP One Penn Plaza New York, NY 10119 (212) 946-9450 Counsel for Plaintiffs-Appellants

March 25, 2016

Case 16-658, Document 116, 03/25/2016, 1736787, Page1 of 25

Case Plaintiffs-Appellants

Pons v. The Republic of Argentina, No. 16-658

Ricardo Pons, Ofelia Nelida Garcia, NW Global Strategy

Foglia v. The Republic of Virgilio Luis Foglia, Maria Cristina Argent Barna, Ricardo Argentina, No. 16-660 Aurelio Triay, Adelalloemi Jun

Perez v. The Republic of AJU S.A., Roberto Akman, Ana Cecilia Albornoz, Graciela Argentina, No. 16-666 Alejandra, Giordano Allievi, Guillermo Almanza, Alfredo

Carlos Alzaga, Amber Reed Corp., Josefa Ambroselli, Felicitas Florencia Fox Anasagasti, Franca Antonione, Alcira Noemi Arditi, Claudio Gabriel Arditi, Eduardo Argentieri, Renate Arnold, Paula Armanda Azcarate, Roberto Bautista Franco Baccanelli, Ezequiel Hernan Baclini, Massimo Baldari, Juan Domingo Balestrelli, Maria Isabel Balestrini, Miguel Alberto Balestrini, Alejandro Pablo Baravalle, Heinrich Peter Baravalle, Alejandro Fernandez Barbeito, Ramon Barbeito, Monica Cristina Barbero, Francisco Basso, Isabel Evangelina Bavassi, Maria Isabel Berraondo, Graciela Marta Berretti, Malcolm Gerald Bern, Sergio Rodolfo Bern, Estrella Bety, Hendrik Beyer, Lorenzo Bianchi, Miguel Angel Bitto, Luis Pedro Bivort, Adolfo Sanchez Blanco, Bliway International S.A., Stella Mans Boffelli, Klaus Bohrer, Boim S.A., Wolfgang Bolland, Leonidas Raul Bordigoni, Bradford Promotions S.A., Alexia Brandes, Crista Irene Brandes, Gunther Braun, Frances Brown, Carlos Alberto Bruzzone, Simonetta Buccioli, Maria Cristina Buenano, Maria Cristina Buenano, Vilma Burgio, Alberto Silvio Bursztyn, Alberto Silvio Bursztyn, Andrea Susana Bursztyn, Rodolfo Burul, Romina Maria Buscaglia, Angela Busi, Elvira Dagmar Buzeat, Elisa Sanchez Caballero, Elisa Sanchez Caballero, Horacio Alberto M. Sane Caballero, Ricardo Sanchez Caballero, Ricardo Sanchez Caballero, Ana Antonia Cabrera, Adrian Caleffa, Manuel Calvo, Mercedes Calvo, Mercedes Calvo, Oscar Reinaldo Carabajal, Anna Maria Carducci, Patricia Ruth Caronna, Jose Emilio Cartana, Beatriz M. Castano, Norberto Dario Castella, Maria Asuncion Inmacu Castelli, Diego Walter Castrilli, Rosa Delfina Castro, Mara Cavana, Liliana Cebrowski, Guillermo Carlos F. Centeno, Luciana Ceredi, Valerio Chiriatti, Davide Ciallella, Carlo Cigolini, Maria Fausta Cilli, Maria Silvia Cinquemani, Aldo Civetta, Cesar Civetta, Oscar Paul Clavijo, Debora Reina Cohen, Enrique Cohen, Denise Marie Laurette Colella, Michele Colella, Michelle Colella, Juan Eduardo Columbo,

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Francaise Compagnie, Compania Calitecno S.A., Sandro Concettini, Consultora Kilser S.A., Corbins Trade S.A., Susana Alicia Costa, County Bay Investments Ltd., Dolly Esther Cubasso, D'Investissements S.A., Bramante Dal Toe, Mario Dal Toe, Ada Dal Trozzo, Maurizio Dalla, Rosas De Cohen, Terenciano De Jesus Cabrera, Cesare De Juliis, Francisco Eduardo De La Merced, David De Lafuente, Susana Frasca De Lauria, Maria Marta De Luca, Irma Flaydee Redondo De Negri, Andrea De Nicola, Nestor De Nicola, Paula De Nicola, Rosa Sara Pompeya La De Parada, Beatriz Leonor De Ramos, Attilio De Rosa, Rivka Schmuskovits De Schuster, Alicia G. De Sondermann, Guido Debiasi, Estela Isabel Delgado, Bibiana Della Flora, Alejandro Demidovich, Laura Victoria Demidovich, Brigida Elvira Denis, Ruben Ubaldo Di Marco, Dina Di Tommaso, Arnoldo Dolcetti, Gabrielle Dolcetti, Guiseppe Dolcetti, Marcella Dolcetti, Arnoldo Dolecetti, Guillermo Jorge Domato, Graciela Donnantuoni, Guillermo Dotto, Drawrah Limited, Griselda Teresa Dulevich, Denise Dussault, Marie Laurette Dussault, Ines Delia Eidelman, Roberto Claudio Pitrona Elle, Ensenada United Corporation, Christa Erb, Rudolf Erb, Carlos Adolfo Escati, Maria Del Carmen Escudero, Valentina Etchart, Alejandro Alberto Etcheto, Fernando Exposito, Vanina Andrea Exposito, Fiorenzo Faccioni, Silva Falomo, Farigold Trade S.A., Jorge Corado Farinola, Nicolas Carlos Amador Farinola, Roberto Fedecostante, Zum Felde, Mercedes Feliu, Ferismar Corp. S.A., Bernardo G. Ferman, Alejandro Enrique Fernandez, Fernando Barbeito Fernandez, Gustavo Carlos Ferreira, Maria Esther Ferrer, Maria Mercedes Mendez Ferro, Feysol S.A., Fincompany S.A., First City S.A., Fiseico, Eduardo Andres Francheschi, Andrea Fabiana Fucito, Giuseppina Fuschini, Gloria Gaggiolo, Alicia Evelia Galiani, Gametown Corporation, Gametown Corporation S.A., Graciela Adriana Gamito, Pierino Garrafa, Luis Angel Gatti, Marta Beatriz Gatti, Susana Leonor Gatti, Attilio Gaudenzi, Enrique Antonio Julio Gebert, Eva Sondermann Geller, Gellxon Corp., Liliana Edith Genni, Ghibli Investments Ltd., Luigi Giacomazzi, Luigi Giacomazzi, Patrizia Giacomazzi, Monica Giannattasio, Vittorio Giannattasio, Eduardo Gibson, Lydia Haydee Gigaglia, Rodolfo Alberto Gil, Juan Omar Giovachini, Maurizio Giove, Norberto Pablo Giudice, Nelida Amelia Giusti de Behar, Golsun S.A., Alberto Aniceto Gonzalez, Delia Isabel Gonzalez, Mariana Gonzalez, Thea Pina Gorgone, Thea Pina Gorgone, Susana Molina Gowland, Alicia Beatriz Gracian, Monica Haydee Graciotti, Giancarlo Grassi, Juan Carlos Greco, Corrado Guerrini, Marta Guerrini,

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Manuel G. Guillen, HWB Alexandra Strategies Portfolio, HWB Alexandria Strategies Portfolio, HWB Dachfonds-Venividivici, HWB Gold & Silber Plus, HWB Portfolio Plus, HWB Renten Portfolio Plus, HWB Victoria Strategies Portfolio, Alberto Haber, Cristoph Hagemann, Helmut Hagemann, Hamburg Consulting Inc., Michael Heeb, Alberto Guillermo Hillcoat, Imperial Bylidol S.A., Inter Palmisano S.A., Bruno Italia, Juan Alberto Jose, Pablo Hugo Kalbermann, Pedro Kalbermann, Pedro Kalbermann, Miguel Kaufmann, Ricardo Kaufmann, Kinburg Trust S.A., Diana Klein, Casimiro Kornas, Kazimierz Kornas, Julio Hector Krasuk, Carlos Alberto Lagos, Carlos Alberto Lagos, Maria Del Las Mercede Lagos, Jose Alberto Landi, Susana Lauria, Laynel Corporation, Moreno Legnaro, Federico Hector Leimgruber, Gabriel Fedrico Leimgruber, Ana Lidia Leivas, Maria Teresa Lepone, Lerinerco S.A., Lerinerco S.A., Rita Leso, Woon Cheung Leung, Horacio Tomas Liendo, Miguel Limoli, Lina Lo Vullo, Nora Raquel Lopez, Lucabras S.A., Dante Luciano, David Adrian Luciano, Nelson Dante Luciano, Alejandro R. Luppi, Antonia Mirian Maciel, Norberto Angel Garcia Madeo, Makapyan S.R.L., Dora Raquel Malec, Dora Raquel Malec, Maura Maletti, Mirta Beatriz Mandolino, Maria Claudia Mangialavori, Elena Marcaccini, Jorge Marcelo, Franco Maria Conte, Olga Alba Marini, Marland International S.A., Raul Alejandro Gonza Martin, Carlos Alberto Martinez, Claudio Martinez, Elena Graciela Martinez, Colombo Masi, Hugo Masini, Francesco Massoletti, Paula Mastronardi, Claudio Miguel Matheou, Mazoral S.A., Claudio Oscar Mazza, Manuela Mazzanti, Massimiliano Mazzanti, Mazzini, Livio Mazzola, Francisco Jose Mechura, Lis Carina Medina, Raul Horacio Mendez, Gabriel Miguel, Ramon Miguel, Alesia Milanesi, Luciano Milanesi, Enrique Sebastian Palac Minetti, Maria Ida Modena, Modern Group S.A., Francisco Miguel Molinari, Susana Alicia Monkes, Lisandro Roberto Arturo Mora, Ildebrando Motti, Luca Mulazzani, Lucio Ramon Mur, Carlos Alberto Muraca, Silvia Alcira Murillo de Gebert, Adolfo Miguel Muschietti, Adolfo Miguel Muschietti, Alejandro Federico Muschietti, Jose Antonio Muschietti, Maria Cristina Muschietti, Rodrigo Felipe Muschietto, NW Global Strategy, Carla Nanni, Tellade Nava, Ramon Eduardo Nebhen, Jorge Alberto Atilio Negri, Ansgar Neuenhofer, Beate Neuenhofer, Edith Elvira Nicolas, Norfolk Investment Trade Co. Ltd., Anna Oldak, David Oldak, Samuel Oldak, Uri Oldak, Aldo Naj Oleari, Jesus Jorge Otani, Ana Maria Aurora Otero, Silvia Beatriz Ovejero, Alfredo Pacheco, Luigi Paciello, Alessandra

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Padoan, Gloria Padoan, Luigi Padoan, Pierluigi Padoan, Maria Susana Pagano, Sebastian Jorge Palacio, Renato Palladini, Nelida Rosa Paolini, Guillermo Pedro Parada, Mariano Roberto Parada, Roberto Carlos Parada, Dario Alberto Pardal, Lilia Angelica Parisi, Elena Pasquali, Socrate Pasquali, Antonio Juan Pauletich, Fabian B. Pauletich, Luciana Pedrolli, Luciana Pedrolli, Maria Elena Pelayo, Diego Pedro Peluffo, Diego Pedro Peluffo, Jose L. Peluso, Florencio Perez, 1-lector Perez, Franco Peruz, Aurelio Pesenti, Hartmut Peters, Maurizio Petroni, Burghard Piltz, Lidia Florinda Pioli, Atilio Luis Pocosgnich, Carolina Pocosgnich, Mirta Antonia Portela, Portico Capital Inc., Adriana Beatriz Poveda, Marcelo Eduardo Prima, Eugenio Quartrini, Jose Luis Quatrini, Sebastian Quatrini, Maria Lucrecia Quiroga, Delfin A. Rabinovich, Edgardo A. Ramos, Beatriz Marti Reta, Carlos A. Rial Coto, Marcelo Ruben Rigueiro, M. Alejandra Terra Risso, Enrique Jorge Rocca, Santiago Rocca, Daniel Horacio Rolfo, Andrea Ronzon, Jorge Joracio Rosini, Lillina Rosso, Nestor Alberto Rubin, Mario Alberto Ruiz, Vivian Oriana Vicencio Saavedra, Silvia Mabel Saccone, Salvador Saddemi, Ana Maria Saenz, Graciela Candida Corleis Saenz, Rafael Antonio Salamanca, Ana Maria Saldana, Anye Salinovich, Alicia Ester Salvador, Abel Vicente Santana, Dora Luisa Sasal, Maria Agustina Sauco, Maria Florencia Sauco, Maria Griselda Sauco, Osvaldo Lorenzo Sauco, Silvio Eduardo Sauco, Roberto Virgilio Sauro, Guido Scanavino, Lydia Scanavino, Michael Schmidt, Flavia Marina Schuster, Nicolas Schuster, Andreas Wilfred Schwald, Josef Schwald, Edgardo Gerardo A. Sciafani, Agostino Scocchera, Oscar Secco, Carlos Jesus Sendin, Pedro Marcelo Sexe, Stefania Simoncini, Leonardo Hilario Simone, Eva Sondermann, Eva Sondermann, Ricardo Sondermann, Susana Sondermann, Naiby Eliana Soria, Santa Sorrentino, Diego Marcos Sorroche, Eduardo Hector Sorroche, Veronica Sorroche, Stefano Spanicciati, Marcelo Spiller, Michele Stagnitto, Alexander Stern, Ingeborg Stern, Patricia Storari, Street Investments Limited, Ambrogio Stucchi, Giuseppe Stucchi, Maria Luisa Stucchi, Sidney Sutter, Hernan Taboada, Jorge Manuel Taboada, Lucia Rafaela Tasso, Mariana Noemi Tauss, Telincor S.A., Luis Garcia Tobio, Diego Fabian Topf, Maria C. Ungaro Torrado, Gabriella Toscano, Tralove Company S.A., Viviana Noemi Tuoron, Tullia Turchi, U.V.A. Vaduz, Carlos Arturo Jose Ulla, Decio Carlos Francisc Ulla, Ute Kantner, Patrizia Valeri, Ana Valeria, Armando Eduardo Valerio, Marcos Vanni, Horacio Alberto Vazquez, Lucia Vettoretti, Vicencio, Victoria Strategies Portfolio Ltd., Andrea

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Vignali, Roque Perez Villalbia, Luigi Vitiello, Tommasino Vitiello, Felicitas C. Von Gromann, Wege Zu Mozart Veranstaltungsgesekkschaft m.b .11, Amanda Wieliwis, Witkron S.A., Jorg Zahn, Sabine Zahn, Loris Zavoli, Peng Zeying, Graciela Zubasti, Ramon Zubielqui, Alfredo Enrique Zucchini, Zylberberg Fein LLC, Lidia Fernandez de Barbeito and Francisco de Gamboa

Varela v. The Republic of Pablo Alberto Varela, Lila Ines Burgueno, Mirta Susana Argentina, No. 16-667 Dieguez, Maria Evangelina Carballo, Leandro Daniel

Pomilio, Susana Aquerreta, Maria Elena Corral, Teresa Munoz De Corral, Norma Elsa Lavorato, Carmen Irma Lavorato, Cesar Ruben Vazquez, Norma Haydee Gines, Marta Azucena Vazquez

Dorra v. The Republic of Maximo Dorra, Olga Dc Dorra Dorra, Raul Rennella, Sandra Argentina, No. 16-668 Elizabeth Schuler, Angel Emilio Molinos

Beloqui v. The Republic of Miguel Angel Beloqui, Ana Zemborain Zemborain Argentina, No. 16-672

Guibelalde v. The Republic of Horacio Guibelalde, Marta Mabel Folgado Argentina, No. 16-673

Lambertini v. The Republic of Egar Ramon Lambertini, Ana Doratelli, Scoggin Capital Argentina, No. 16-678 Management II LLC, Juana Bonaiuti, Scoggin International

Fund Ltd., Scoggin WorldWide Fund Ltd., Tito Siena

Angulo v. The Republic of Jose Pedro Angulo, Pedro Timoteo Angulo, Fernando Argentina, No. 16-689 Crostelli, Juan Carlos Crostelli, Martina Crostelli, Viviana

Crostelli, Patricio Hansen, Claren Corporation

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TABLE OF CONTENTS

ARGUMENT .1

1. The Individual Bondholders have not settled, and still need the protection of the Equal Treatment Injunctions .........1

2. The Injunctions were grounded in the "rule of law" and enforcement of Argentina's contractual obligations .............2

3. Vacatur was explicitly premised on getting bondholders to settle, which is not a legally permissible reason for modifying an injunction .............................................3

4. Settlements by many bondholders do not justify vacatur of the Injunctions as to non-settling holders ......................5

5. It is still the case that Argentina has not meaningfully negotiated with the Individual Bondholders or other remaining bondholders ..............................................8

6. The District Court's reliance on Argentina's repeal of the Lock Law as a changed circumstance is misplaced .........9

7. The Individual Bondholders are not demanding a "full payment" settlement even though their bonds and judgments do entitle them to full payment ......................10

8. The issues raised by the United States do not change the analysis ..........................................................13

CONCLUSION....................................................................15

1


TABLE OF AUTHORITIES

Page

Cases

Del Rio v. Northern Blower Co., 574 F.2d 23 (1st Cir. 1978)................................................................... 4

Kothe v. Smith, 771 F.2d 667 (2d Cir. 1985).........................................................4

NML Capital, Ltd. v. Republic ofArgentina, 699 F.3d 246 (2d Cir. 2012)....................................................3

NML Capital, Ltd. v. Republic of Argentina, 727 F.3d 230 (2d Cir. 2013) ...................................................3

Schunk v. Schunk, 84 A.D.2d 904,446 N.Y.S.2d 672 (1981)....................................4

Wolff v. Laverne, Inc., 17 A.D.2d 213, 233 N.Y.S.2d 555 (1962) ....................................4

11


ARGUMENT

1. The Individual Bondholders have not settled, and still need the protection of the Equal Treatment Injunctions

The Individual Bondholders group remains intact, except for Tortus

Master Capital Fund LP, whose appeals have now been dismissed. 1 This

remains the largest group whose claims remain unsettled.

As far as counsel for the Individual Bondholders can tell, Argentina

has not offered terms to any bondholder outside the terms of its published

public offer, other than the one-off settlement with the NIML Group. As to

all others, the government's position remains inflexible, non-negotiable, and

unilateral.

The group of 115 individual Italian bondholders represented by Duane

Morris LLP, with $155 million in claims, settled last week. According to

the statements issued by the Special Master, that settlement, and all other

settlements to date other than the NML Group's, "fall squarely within the

terms of the Propuesta of February 5, published by the Republic of

'See Brief for Plaintiffs-Appellants Ricardo Pons et al., "Individual Bondholders" at 1 fn. 1. Tortus accepted the pari passu option in Argentina's public settlement offer, and also had previously sold many of its bonds into the secondary market.


Argentina. ,2

2. The Injunctions were grounded in the "rule of law" and enforcement of Argentina's contractual obligations

The principle that animated Judge Griesa's issuance of the Equal

Treatment injunctions in 2012 and 2015 was respect for the "rule of law"

and enforcement of contractual obligations. He was offended that

Argentina, having submitted to jurisdiction here, would not pay the money

judgments lawfully entered against it.

In the original Injunction order of February 2012, the court repeatedly

referred to the Republic's "intention to defy any money judgment entered by

this Court" and the "strong public interest in holding the Republic to its

contractual obligations." A534-535. Promoting settlements was not

mentioned. A533-538. And in the main order entering Injunctions for me-

too bondholders, in October 2015, the District Court similarly emphasized

2 Statement of Special Master, March 18, 2016, http://www.pmewswire.com/news-releases/argentina-settles-with-1 15- individual-bondholders-holding-1, 55-million-in-defaulted-bonds-300238220.html; accord Statement of Special Master, March 9, 2016, http ://www.prnewswire . corn/news-releases/statement-of-daniel-a-pollack- court-appointed-special-master-march-9-20 16-300233604 .html ("All such settlements are within the terms of the" public offer); Statement of Special Master, March 4, 2016, http://www.prnewswire.com/news-releases/statement-of-daniel-a-pollack-court-appointed-special-master-march-4-2016-300231251.html ("These settlements are all within the parameters of the" public offer). The settlements announced after the vacatur order was entered total approximately $352 million, or 4% of the total bonds covered by Injunctions.

2


the principle of enforcing contracts, not promoting settlements. A549-574.

On appeal, when this Court affirmed the 2012 Injunctions, it also

lamented Argentina's "failure to pay bondholders" and emphasized

enforcement of Argentina's "contractual obligation of equal treatment."

NML Capital, Ltd. v. Republic of Argentina, 699 F.3d 246, 250 (2d Cir.

2012) ("NML I"); NML Capital, Ltd. v. Republic of Argentina,727 F.3d

230, 241 (2d Cir. 2013) ("NML ii"). Settlement was not discussed.

The District Court's current insistence that promoting settlement was

the reason the Injunctions were entered simply does not square with the

factual record from that time.

The Individual Bondholders and other remaining bondholders need

and deserve protection against Argentina's ongoing failure to pay on the

bonds and its obstinate insistence that defaulted bondholders do not deserve

equal treatment. Not even Argentina contends that those goals of the

Injunctions have been fulfilled for these bondholders.

3. Vacatur was explicitly premised on getting bondholders to settle, which is not a legally permissible reason for modifying an injunction

Although the District Court's vacatur orders repeatedly extol the

virtues of settlement, they do not cite any legal authority supporting the

proposition that promoting settlement is a valid reason for modifying an

3


injunction. Nor does Argentina.

This Court has made clear that promoting settlement is not supposed

to intrude into judicial decision-making. "Although the law favors the

voluntary settlement. . . , it does not sanctions efforts by trial judges to

effect settlements through coercion." Kothe v. Smith, 771 F.2d 667, 669 (2d

Cir, 1985), citing Del Rio v. Northern Blower Co., 574 F.2d 23, 26 (1st Cir.

1978); Wolff v. Laverne, Inc., 17 A.D.2d 213, 233 N.Y.S.2d 555 (1962)

("We view with disfavor all pressure tactics whether directly or obliquely, to

coerce settlement by litigants and their counsel."); Schunk v. Schunk, 84

A.D.2d 904, 905, 446 N.Y.S.2d 672 (1981) (pressure tactics to coerce

settlement simply are not permissible).

The District Court professed to recognize a truncated version of that

principle. "Of course," it observed, "the court does not have the power to

force plaintiffs to accept a settlement." Indicative Ruling at 22, SPA68. But

the principle is not limited to a prohibition against "forcing" settlements --

the court is not supposed to "pressure" parties into settling, or to use its

adjudicative power specifically to influence settlement outcomes.

By vacating the Injunctions, the District Court was altering the

litigation landscape in Argentina's favor, and was thereby exerting pressure

on bondholder plaintiffs to settle on the terms Argentina was offering. The


District Court was blatant about it when ordering vacatur: "The injunctive

relief cannot be allowed to be used as a tool for leverage in negotiations."

Opinion and Order at 4, SPA83. The correct view should have been that an

order of vacatur should not be such a tool for leverage. Yet it was, and is,

such a tool, unless the vacatur order is reversed.

It follows from the fact that promoting settlement is not a proper

reason for vacatur, that the mere prospect of "openness" to settlement by a

defendant subject to an injunction does not constitute a "changed

circumstance" that a court may permissibly take into account, let alone

accept as dispositive, when considering modification of the injunction. The

District Court should not have given this factor any weight, unless and until

the professed openness resulted in a settlement that in fact fulfilled the

Injunctions’ purpose for each Injunction holder: in this ease, resolution of

their claims for equal treatment and payment of their bonds and judgments.

4. Settlements by many bondholders do not justify vacatur of the Injunctions as to non-settling holders

Argentina resorted to the "don’t let the tail wag the dog" clich� in its

briefing below, when addressing the Individual Bondholders’ protests, and it

continues the argument here: that settlements by 85% or more of the

bondholders constitute changed circumstances, justifying vacatur of the

Injunctions as to the remaining 15%. That argument has no legal basis.

5


First, there is no authority that injunctions are a majority (or super-

majority) proposition. Each bondholder moved for entry of his/her/its

Injunction and those motions were granted. There is no collective action

clause in any of the defaulted bonds by which any holders agreed to give up

their several and individual rights. Neither Argentina nor the District Court

identified any authority to the contrary. Sheer force of numbers of settling

holders, in this context, cannot justify vacatur.

Second, the argument that maintaining the injunctions for non-settled

parties will prevent the settlements that have been reached from going into

effect is not valid or persuasive.

The fact that the settlements' terms provide that universal vacatur is a

condition precedent is a classic bootstrap, because those terms were

voluntary, and apparently added simply to bolster the argument for vacatur

without any independent reason. At most, the settlements could properly

provide for vacatur of the settling bondholder's injunction. A contractual

doomsday machine enlisting each settling bondholder into the argument for

Argentina contends that, "because the Injunctions ... all impose the same restrictions on the Republic that are not specific to any individual action, it only makes sense that the Injunctions be vacated across all cases." Arg. Br. at 16 n.5. That is not correct. The Injunctions prohibit Argentina from paying Exchange Bondholders without making ratable payments to Injunction holders. That prohibition works regardless of whether there are five or 500 remaining bondholders holding Injunctions.


vacating all Injunctions cannot properly become a legal or equitable

argument for universal vacatur.

The idea that vacatur is necessary for Argentina to raise funds for the

other settlements is factually lacking; Argentina has already made

arrangements for bank financings4 and its Treasury is amply funded. Even if

those premises were true, the arguments do not address why it would be fair

to take away the individual Bondholders' (and others non-settling parties')

rights in order to provide funding for other bondholders' settlements.

Judge Griesa did address this issue in his order granting Equal

Treatment Injunctions to the me-too bondholders just last October. He

observed:

The Republic also claims the court should not issue additional injunctions because they would impede settlement. The Republic's reluctance to entertain meaningful settlement discussions before the Special Master should not prevent plaintiffs from vindicating their rights under the paripassu clause. If anything the equities cut the other way. It would be inequitable to give injunctive relief to one group of bondholders while denying that relief to other, similarly situated bondholders. Ordering specific performance therefore ensures basic fairness by placing these plaintiffs on equal footing with the Lead Plaintiffs.

"Argentina Hires Seven Banks to Handle Global Bond Offer," K. Porzecanski, bloomberg.net, March 21, 2016 ($12 billion fund raise due in mid-April, following $5 billion in bank financing obtained in January). These new bonds would not be Exchange Bonds and are not covered by the Injunctions.

VA


October 30, 2015 Order at 10, SPA30. Vacatur of the Injunctions now

would fly in the face of those former, and correct, sentiments of the District

Court. Vacatur would deprive the Individual Bondholders of their "rights

under the paripassu clause"; whereas preserving the Injunctions will help

ensure "basic fairness" for the remaining bondholders who should be given

"equal footing" with the NML Group when negotiating a conclusion to the

litigation.

5. It is still the case that Argentina has not meaningfully negotiated with the Individual Bondholders or other remaining bondholders

This brief will not dwell on the history of negotiations because

nothing has changed. President Macri's "openness" to negotiations has

devolved into Argentina's unilateral public offer, take-it-or-leave-it. Other

than rhetorically, Argentina has not disputed that its officials have not

entered into any substantive settlement discussions with the Individual

Bondholders, or any of the other remaining holders or class action plaintiffs.

The government's attitude is simple: bondholders may accept the public

offer, and no other offers are being made. in that regard, the Individual

Bondholders certainly do dispute Argentina's "good-faith willingness to

negotiate," simply because that has never existed as far as the Individual

Bondholders are concerned.

n.


Recitation of this fact is not meant to elevate the importance of

negotiations per Se. Because the District Court's vacatur orders relied so

heavily on Argentina's supposed "openness" to negotiations, it is germane to

note that the promise has never been realized for the remaining bondholders.

But the real question is not whether some form of negotiation occurs. It is

whether the parties are fairly armed when they enter the arena. In this case,

the bondholders are entitled to retain their rights under the Injunctions

because the purposes of the Injunctions have not been fulfilled for the

bondholders, and the real and relevant circumstances have not changed.

6. The District Court's reliance on Argentina's repeal of the Lock Law as a changed circumstance is misplaced

The District Court also relied, as a changed circumstance, on the

condition in its vacatur order that Argentina must repeal the "antagonistic

legislation" it had previously enacted, including prohibitions against any

negotiations with bondholders and against any settlements (except when the

prohibitions were suspended to all fulfillment of the unilateral "swap" offers

in 2005 and 2010). For example, the court asserted that the new

administrations' approach is "sharply inconsistent" with, for example, Law

26,547, enacted in 2009, which limited swap settlements to "no more than

29% of the original bonds' value." Indicative Ruling at 15-16, SPA61-62.

The bill now being considered in the Argentine Congress, in Article 6


(a) and (b), explicitly restricts the authority of the government to enter into

settlements (other than prior agreements specifically listed in Article 5,

which includes the MvIL settlement) - allowing settlements only at the terms

of the public offer, i.e., face value + 50% for all defaulted bonds, or 70% of

claim value for bonds covered by an Injunction. See "Bill passed by the

Chamber of Deputies of Argentina, March 15, 2016" at Addendum to Reply

Brief for Plaintiffs-Appellants Aurelius Master Capital, Ltd., et al., pp. 3-6.

That means that the difference between the prior "29%" legislative

regime, cited by the District Court as support for the Injunctions, and the

current "50% / 70%" legislation, cited as the new administration's

"changed" approach, is only one of numbers. The new legislation, if

enacted, will at most be a mini-Lock Law, apparently allowing the

government to settle with bondholders only on the prescribed terms, just as

did the pre-existing legislation when it was suspended to allow the swap

offers. In light of the restrictions in the new legislation, the District Court's

"repeal of legislation" reason for vacating the Injunctions also falls apart.

7. The Individual Bondholders are not demanding a "full payment" settlement even though their bonds and judgments do entitle them to full payment

Both the District Court and Argentina assert that neither the

Injunctions nor the realities of the situation admit of the possibility that

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bondholders deserve, and have legal grounds for insisting on, full payment

on their bonds. This is encapsulated in the District Court's overarching view

of the litigation: "For years the court has repeatedly recognized that the only

viable way to end this litigation is through settlement -- surely for less than

the full claim, as the notion of 'settlement' implies." Indicative Ruling at

21-22, SPA117-118.

As a general observation about the practicalities of complex federal

litigation, that statement is hard to fault. As an exortation to the parties, and

a reason to appoint a Special Master to mediate settlement discussions, it is

appropriate. But as a principle for judicial decision-making, even in the

realm of exercise of equitable discretion, it is impermissible, as the caselaw

cited in Point 3 above establishes.

Unlike most litigation and settlement situations, here, most of the

plaintiffs hold money judgments representing legal entitlement to their "full

claim." For years, the calculation of the (full) amounts owing on the bonds

was a ministerial exercise in resolving bondholders' summary judgment

motions. The Injunctions, too, have built into them the requirement of full

payment on the bonds, not a compromise: under the ratable payment

formula, "if Argentina pays Exchange Bondholders 100% of what has come

due on their bonds at a given time, it must also pay plaintiffs 100% of the.

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principal and accrued interest that they are currently due." NML II, 727

F.3d at 239. There is no question that bondholders are legally entitled to

full payment.

Under these circumstances, the District Court's decision that the

Injunctions "cannot be allowed to be used as a tool for leverage in

negotiations" (Opinion and Order at 4, SPA83) is itself inequitable. The

Equal Treatment provision did not disappear from the bonds' governing

documents and there is no good reason the Injunctions, which are the only

way the provision can be enforced, should be withdrawn, simply because

(like every other decision in litigation) they may create "leverage."

Embedded in both the District Court's and Argentina's approach is the

belief that the remaining Injunction bondholders should accept the

government's unilateral 70% offer. That was certainly the Special Master's

view, when he publicly lauded the government's announcement of the public

offer as "historic" and then excluded anyone but the NML Group from

meaningful negotiations with Mr. Caputo (the Argentina finance secretary)

and his colleagues throughout February. As a practical matter, the District

Court is doing exactly what it said it must not: pressuring settlement

outcomes.

The proper course is simple: leave the Injunctions in place for each

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bondholder unless and until a settlement is effectuated.

Lurking in the background is a concern that remaining bondholders, if

their Injunctions remain operative, will use the Injunctions to "take

hostages" and extract overly generous settlements. Since there is an upper

bound to any settlement (the full claim value, for which most bondholders

already have money judgments), this should not be a major worry. But in

any event, that is not the scenario that would unfold. The individual

Bondholders are as eager to settle as is Argentina. The 79% level of the

NML Group's settlement is a useful marker for future negotiations. if the

District Court and Special Master had simply let the situation evolve

naturally, this all would have been over a month ago.

8. The issues raised by the United States do not change the analysis

(a) It is clear from the amicus brief filed by the United States (U.S.

Br.) that the Solicitor General's office is still fighting the war of 2012: it

insists on repeating its disagreement with how the District Court and this

Court have interpreted the pari passu clause, and its view of the Injunctions

as "threaten[ing] harm to U.S. foreign relations." U.S. Br. at 2-3 n.1. Those

views were rejected when the Injunctions were entered and affirmed. The

U.S. government's continued insistence that this Court's decisions on those

subjects are "deeply problematic," id., should mean the government has

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forfeited its credibility here.

(b) Perhaps the U.S. government is inattentive to the plight of the

Individual Bondholders because they are, after all, largely foreigners. On

the other hand, the settling hedge funds, including the large funds that settled

at a premium to the public offer, are American.

(c) The U.S. government's view of the Individual Bondholders is

that they will shun settlement, over-use their supposed leverage, and

"maximize their own recovery, at the expense of the majority of the settling

bondholders." U.S. Br. at 14. Those unfounded accusations show that the

government has no idea what has really happened in this case. There is no

evidence that the remaining bondholders will exploit the Injunctions in that

way. Since Argentina has not even engaged those bondholders in

meaningful negotiations, the concerns are at most uninformed speculation.

(d) If the U.S. government's foreign policy interests favor "swift

resolution" of these disputes, U.S. Br. at 1, then those interests are aligned

with the desires of the Individual Bondholders. The best and fairest way to

achieve swift resolution is to let the normal legal and negotiation process

unfold promptly and without impediment, based upon the status quo, with

the Injunctions in place as one feature of the landscape that the parties must

consider in crafting their negotiation strategies.

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CONCLUSION

As it stands, most of the people being "left behind" are a large

collection of small bondholders, and the winners are wealthy and powerful

interests (hedge funds and governments). That is not the way this story has

to end, or should end. If the Injunctions are kept in place for the

bondholders who have not yet settled, negotiations will undoubtedly occur

promptly and productively. The terms of the NML Group settlement are an

appropriate and objective negotiating benchmark for a more acceptable

outcome to this litigation saga for most, and perhaps all, remaining

bondholders.

The vacatur of the Injunctions in the Individual Bondholders' actions

should be reversed and the cases remanded to the District Court.

Dated: March 25, 2016 New York, New York

kYAHm11aI(tItm

Michael C. Spencer One Penn Plaza New York, NY 10119 (212) 946-9450

Attorneys for Plaintiffs-Appellants

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CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because this brief contains 3,205 words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii),

2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word 2008 for mac Version 12.3.6 in Times New Roman 14 point.

March 25, 2016

Michael C. Spencer Attorney for Plaintiffs-Appellants

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CERTIFICATE OF SERVICE

I hereby certify that on March 25, 2016, I served a true and correct copy of the foregoing Reply Brief for Plaintiffs-Appellants Ricardo Pons et al. - "Individual Bondholders" on all counsel of record inthiese consolidated appeals via CM/ECF pursuant to Local Rule 25.1(h)(1)&(2).

Michael C. Spencer

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Case 16-658, Document 116, 03/25/2016, 1736787, …/media/Files/Services/Argentine... · Ramon...

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