FedSoc Blog

Supreme Court Voices Resistance to Argentina Blocking Creditor’s Access to Asset Records


by Publius
Posted April 22, 2014, 8:01 AM

The Wall Street Journal reports:

The U.S. Supreme Court on Monday took up a case connected to Argentina's historic default in 2001, voicing resistance to the country's request to block a holdout creditor from obtaining bank records about Argentina's international assets.

The high court, however, expressed some dissatisfaction with both sides in the case. The justices during an hourlong oral argument also raised concerns that subpoenas for banking information from holdout creditor NML Capital Ltd., a unit of Elliott Management Corp., were too broad and potentially intruded on Argentina's sovereignty.

The court's questions and comments suggested the justices were contemplating a middle-ground ruling that would allow NML some leeway to obtain bank records on the country's assets, but perhaps not as much information as the creditor would like.

NML is among a group of creditors that opted against participating in Argentina's debt restructurings. It is seeking to collect on more than $1.6 billion in legal judgments it has won against Argentina, which the country has refused to pay.

NML served subpoenas on Bank of America Corp. and Banco de la Nación Argentina, seeking records on bank accounts maintained by Argentina. NML said it wants the records to learn how Argentina moves its assets around the world and to identify places where it could seek to collect on its judgments.

On Monday, Argentina's lawyer, Jonathan Blackman of Cleary Gottlieb Steen & Hamilton LLP, urged the Supreme Court to overturn a lower-court ruling that allowed the subpoenas. "This far exceeds the enforcement powers of the U.S. courts," he said.

Several justices reacted skeptically, suggesting litigants are entitled to seek information to help them collect on court-issued judgments, even when the defendant is a foreign country instead of a private party. "What's wrong with asking" the banks about whether Argentina has assets that a creditor can target, Justice Anthony Kennedy asked.

The justices also said NML's subpoenas were written so broadly as to allow the creditor to discover financial information on much more than Argentina's commercial-property assets around the world. If the creditor is seeking information about Argentine assets related to military or diplomatic operations, "that's pretty intrusive," Chief Justice John Roberts said.

NML attorney Theodore B. Olson of Gibson Dunn & Crutcher LLP said his client has a right to obtain information that could help it collect against Argentina. "We need to know" where the country's assets are located, he told the court.

A decision is expected by the end of June.

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