NEW YORK, N.Y. – An appeals court ruling has speeded settlements between Argentina and bondholders and set the stage for the South American nation to escape court orders that have stymied it in world financial markets for years, a court-appointed mediator said Friday.
Mediator Daniel Pollack said in a statement that U.S. District Judge Thomas P. Griesa may lift orders as early as next week that have isolated Argentina from global financial markets.
“This is an enormously important event for the republic, its 40 million people and, indeed, the world financial system,” Pollack said.
With the election of a new president, Argentina began settling claims rather than fighting them in the courts. Troubles arose after Argentina defaulted on $100 billion in bonds in 2001.
A ruling by the 2nd U.S. Circuit Court of Appeals in Manhattan earlier this week found Griesa acted appropriately in deciding to lift orders restricting Argentina’s ability to move money around. Pollack said that decision had already resulted in movement by some bondholders to settle disputes.
Griesa’s orders stood in the way of more than $8 billion in settlements Argentina has reached with U.S. hedge funds and others since January. Lawyers for bondholders who carry bonds worth less than $2 billion had tried to delay expiration of the orders on the grounds that Argentina would stop negotiating.
But Pollack said the opposite has occurred and the impact of the 2nd Circuit ruling was “immediate and positive.”
He said several of the remaining holdout bondholders had approached Argentina and either signed settlements or were in active negotiations to do so, including a group of bondholders with $800 million in claims.
Before the appeals ruling, it did not seem likely that the individuals holding those bonds would reach deals, he said.
“It is particularly gratifying to me to see that settlements continue to be made and that the remaining ‘holdouts’ are now exploring settlement,” Pollack said.
The appeals court explained its ruling, issued orally several days earlier, in a written decision Friday, saying keeping the court orders in place would have hindered the consummation of settlements.
The 2nd Circuit said keeping the orders in place “would now serve to further frustrate settlement attempts and perhaps close the door to ending this protracted and difficult history.”
It added that Griesa has the authority if Argentina does not finish settling debts to put new court orders in place.
This story has been corrected to show Argentina defaulted on $100 billion in bonds, not $100 million.