NEW YORK, N.Y. – Argentina and various banks must reveal information about the nation’s assets to U.S. bondholders who are owed about $1.5 billion, a federal appeals court said Tuesday, though the panel cautioned a judge that a sovereign state is entitled to grace and civility and some records may be off limits.
The ruling by a three-judge panel of the 2nd U.S. Circuit Court of Appeals gives a green light to lawyers for bondholders who refused to trade their holdings for bonds worth less than half as much after Argentina in 2001 defaulted on $100 billion of debt.
U.S. District Judge Thomas P. Griesa had allowed the lawyers to pursue records from Argentina and related entities, including banks.
The appeals court said his discretion over what must ultimately be turned over is delicate, especially when it affects Argentina’s diplomatic and military affairs.
It said it might not be possible for Griesa to review documents regarding diplomatic or military issues on his own to determine if they are relevant. The appeals panel said he should be “effective and respectful” as he handles the sensitive aspects of the document review.
The ruling came after U.S. hedge funds that hold Argentina bonds won judgments requiring that they be paid. The hedge funds claim Argentina defaulted on $1.5 billion they are owed after moving assets far and wide to hide them from creditors.
Argentina said in court papers it is being harassed by the hedge funds.
It said the requests for information concern property and finances of the republic’s military and diplomatic core, over 100 separate entities and top republic officials including its current and former presidents.
Argentina’s lawyers said the requests for information provided no “plausible explanation for how such discovery is anything other than an attempt to harass these individuals.”
Lawyers for both sides declined comment.