Paul Singer’s last-ditch attempt to get cash from Argentina this year has failed.
A motion by Singer’s hedge fund, Elliott Management, requesting that the South American country put up a security deposit of $250 million by Dec. 10 was denied by a federal appeals court today.
“Since we will not have a big payment for ages (if ever), this looks like a huge blow to [Elliott’s] strategy,” said sovereign-debt expert Anna Gelpern,
The appellate slap-down of the billionaire hedgie is the second in a week. Last week, the same panel overturned a decision by a District Court judge that would have required Argentina to put $1.3 billion in escrow to pay Elliott by Dec. 15, pending further appeals in a court battle that has dragged on for a decade.
Argentina is scheduled to pay $3 billion on Dec. 15 to exchange bondholders who agreed to big write downs on their debt. Elliott and other so-called holdouts did not agree to the restructuring and are demanding full repayment.
District Judge Thomas Griesa ruled Singer and his band of holdout bondholders are entitled to get paid in full when Argentina made payments to the others.
Argentina President Cristina Kirchner has repeatedly said that the country would never pay Singer and the other holdouts.
In the wake of Griesa’s ruling, when it appeared Argentina might make no payment in order to avoid paying Singer — which could have caused the restructured bonds to default — the price of those bonds went into a tailspin while the price of insuring the country’s debt skyrocketed.
The prices of both returned to more normal levels this week.
The concerns of exchange bondholders — as well as other third parties involved in making the payments, such as Bank of New York — were ignored by Griesa.
But the appeals court decided to give them time to make their case. It allowed the other bondholders — led by hedge funds Gramercy, Brevan Howard and Alliance Bernstein — to intervene in the case.
The 2nd Circuit Court of Appeals panel in Manhattan also set up a schedule for a fuller hearing of the argument, which stretches into late February.
Elliott tried to amend the process via its emergency motion requesting a security deposit as a “good faith” effort by Argentina. Singer’s $20 billion hedge fund argued that if its motion wasn’t granted by Dec. 15, it might get nothing.
“Argentina is . . . actively planning to evade the [court order] by attempting to move offshore its payment structure under the exchange bonds and will use the time to implement such plans,” said lawyer Ted Olsen in Elliott’s motion.
The hedge fund had made such arguments before, citing speculation in the Argentine press. However, a source close to Elliott told The Post it was “highly unlikely” that such work-arounds would be successful.
While Elliott’s emergency motion was a long shot, its demand for $250 million so incensed the exchange bondholders that they quickly shot back at Singer — asking the appeals court to force the billionaire to post $2 billion to an escrow account to help cover losses they might incur if it granted Elliott’s request and Argentina refused to post the security deposit.
Previously, Argentina broached the notion of reopening its debt exchange just days before the appeals court reinstituted its stay. Bondholders who had feared default were encouraged by that, believing it signaled Argentina that was open to negotiating with Elliott behind closed doors.
Those plans are believed to be on ice now, as the country works on its new brief.
mcelarier@nypost.com