Vulture Fund: New York decision in favor of Mendoza – ElSol.com.ar – Diario de Mendoza, Argentina

Mendoza marked an important point in favor of the vulture fund dispute that demanded payment of million-dollar interest. Now, the New York Court has decided in favor of the province, which brings Mendoza closer to the final victory, since it will now be the Court of Appeal of the second circuit that will have the last word.

See as well: New York Court files lawsuit against Mendoza

"This gives us great optimism, all indications are that the Court of Appeal will follow the same steps", explained Attorney General Fernando Simón, head of the defense of the province.

More specifically, the bond creditor Mosche Marcel Ajdler claimed the payment of interest for approximately $ 10 million. At first instance, the Southern District Court of New York granted Mendoza's motion and dismissed the application. the bond holder insisted on appealing the decision to the Court of Appeal.

In addition to completing the work, the government of Alfredo Cornejo hired the New York studio "CLEARY, GOOTLIEB, STEEN & HAMILTON" which represented the province in a foreign jurisdiction. the holdouts.

Still in government, they welcomed the novelty. "This is very good news for the province and for the country," said Lisandro Nieri, Minister of Government and Justice. He added that "it definitely puts an end to the bond deal, which ended in September 2018 and would have already been done at the New York Court of Appeals".

What solved

The New York State Court had to answer two questions: first, if a bond issuer continues to be obligated to pay interest every two years until the principal is paid, even after maturity. And if the answer is yes, he asked if the claims of interest could continue "Ad infinitum" while the principal capital remains unpaid.

The court answered the first question negatively, so the province should not pay interest.

It is now expected that the final decision will be rendered within one to two months. The attorney general's office said the last sentence could set a precedent for the rest of the claims that made the country's bondholders pay millions of dollars.

"Under New York law and the terms of the" trust deed ", in the absence of an action claiming payment of the principal, a bondholder can not badert the 39 conditional obligation to pay interest once the date of payment of the principal past maturing thereof, "explained the control body.

Origin of the conflict

Following the 2001 economic crisis, a process of restructuring the provincial debt was initiated, specifically the BACX1 bond (Aconcagua bond). Then, in 2004, a process of change was initiated, consisting of the cancellation of these bonds issued by Mendoza, in exchange for new debt securities denominated "Bono Mendoza 2018".

Once the exchange finalized, the result of the issuance of the bond Mendoza 2018 rose to $ 230 million, leaving an unchanged balance corresponding to the 2007 Aconcagua bond for about $ 10 million.

As a result of this situation, the bond holder – Mosche Marcel Ajdler – opened the claim arguing that he was entitled to recover all principal and accrued interest, but for the province the debt had been prescribed.