A U.S. appeals court on Friday signaled it might
reverse a judge's decision that expanded a class action of
bondholders suing Argentina over debt in default since 2002.
Members of a three-judge panel of the 2nd U.S. Circuit Court
of Appeals in New York showed discomfort with a federal judge's
decision to expand the class action over a series of
euro-denominated bonds to cover anyone who held them instead of
just continuous holders of the debt.
The 2nd Circuit on Aug. 10 had reversed U.S. District Judge
Thomas Griesa's similar expansion of eight other class actions
against Argentina, and the country's lawyer, Carmine Boccuzzi,
argued on Friday that the ninth was similarly too broad.
Some judges appeared to accept that argument, questioning
how creditors could receive notice that they could opt out of
the class and how the court could determine who ultimately was
covered by the lawsuit, given secondary-market bond trading.
"How is it going to be possible to ascertain the class when
there's going to be secondary market trading between the opt-out
and judgment dates?" Circuit Judge Reena Raggi asked.
Jason Zweig, a lawyer for the plaintiffs, disputed that
ascertaining who belonged in the class action would be a
problem. The plaintiffs, led by bondholder Henry Brecher, are
seeking damages of 68 million euros ($77.3 million).
The hearing stemmed from long-running litigation by
creditors seeking full repayment on bonds after Argentina's $100
billion default in 2002.
The country defaulted again in July 2014 after refusing to
honor orders to pay $1.33 billion plus interest to Elliott
Management's NML Capital Ltd and other hedge funds suing over
the bonds.
Griesa ordered Argentina in June to pay $5.4 billion to
another 500-plus holders of defaulted debt before it could pay
the majority of its creditors.
As part of the litigation, some creditors have tried to
pursue damages as a group in 13 class actions rather than
individually.
But Griesa's rulings over the years have often been
overturned. The Aug. 10 ruling reversed his 2014 decision to
expand eight class actions by creditors seeking $700 million.
Circuit Judge Guido Calabresi called the litigation a
"mess," and another panelist expressed frustration with Griesa.
"We have a district judge who is unable or unwilling to do
what we tell him to do," Circuit Judge Richard Wesley said.