A federal appeals court has a subtle threat for Argentina: Come up with your own plan — or else.
A Manhattan appeals panel, in an unusual move, yesterday asked Argentina to come up with an alternative plan by March 29 to pay $1.44 billion to a group of US bondholders led by Paul Singer’s Elliott Management.
If the country fails to offer up a plan, it appears likely that the court will go ahead and uphold a lower’s court’s plan — which could lead to another Argentine bankruptcy.
A lawyer for the South American country on Wednesday told the court that it would not obey any order to repay the so-called holdout bondholders — because it could not afford to.
The lawyer, Jonathan Blackman, said Argentina was prepared to accept a different formula to repay the debt — but so far the only alternative offered up is to give the holdouts the same terms as the larger group, the so-called exchange bondholders who took a huge haircut.
The appeals court also asked Argentina “what assurances, if any” it can provide the court that it will meet its obligations.
“The court is looking for a way out that doesn’t involve a very significant confrontation between the courts and Argentina,” said debt expert Mark Weidemaier.