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Post by ukipa on Oct 7, 2012 21:33:55 GMT 4
US hedge fund seizes Argentine naval ship US hedge fund seizes Argentine naval ship - The ARA Libertad is now the property of Elliott Capital Management. By Alex Hern - October 4, 2012 - www.newstatesman.com An American hedge fund has seized a ship owned by the Argentine navy from a Ghanaian port, as part of an attempt to collect on bonds purchased after Buenos Aires defaulted in 2001. The fund, Elliott Capital Management, has been engaged in a long-running legal battle with the Argentine government. It specialises in what is euphemistically termed "distressed debt" – it buys up bonds held by countries which are extremely likely to default, or which have already defaulted. As a result, it gets them for a pittance, around one fifth of face value. The strategy from there is to refuse to accept the default. If it does not voluntarily enter into any debt-swaps, then the company can continue to claim it is rightfully owed the full amount on the bonds. If, eventually, it gets paid, a massive profit has been earned. This tactic has led to Elliot, and other funds which operate in a similar manner, being dubbed a "vulture fund", profiting from dead or dying economies. The firm itself insists it only takes action against countries that can afford to pay, but choose not to. The decade-long fight to recover the face value of the Argentine bonds has been carried out on a number of battlefields, from the US Courts to the World Bank (£), but the latest turn is the most nautical of them all. The seizure, of a 100m-long tall ship staffed by 200 sailors, appears to have been planned for some time by Elliott. The FT reports (£): Elliott had been waiting for the ship to stop in a port where it would have a chance to enforce legal judgments previously awarded by UK and US courts. The hedge fund declined to comment. . . US and UK courts have awarded $1.6bn in claims in [Elliott's] favour, but Argentina has taken a tough line on lingering holdouts, saying there will be no further offers. If a US court ruling from February 23 is upheld on appeal, Argentina must pay interest to Elliott before making any payment to holders of bonds issued in the 2005 and 2010 swaps. An appeals ruling has not yet been issued. The Libertad, which Elliott expects to be awarded ownership of, has been estimated in value at between $10m and $15m. The vessel, a tall ship used by the Argentine Navy to train sailors and a former holder of the world speed record for a transatlantic crossing by sail, was on a graduation tour. It is free to leave the Ghanaian port of Tema if Buenos Aires posts a bond with the court, which Elliott would then also seek to recover. In the long-run, Elliott will still rely on winning court cases to pressure the Argentine government into paying the outstanding loan in cash, rather than boats.
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Post by Sapphire Capital on Oct 7, 2012 22:52:53 GMT 4
here is the ship! So for those not familiar with Singer’s form in making millions of dollars in profits from the world’s poorest countries, here’s Diary with a quick reminder. In 1995, Elliott bought defaulted Peruvian bank debt for $20m and successfully sued for $58m. More recently, the company’s subsidiary Kensington International bought a $32.6m loan owed by Congo-Brazzaville at the reported cut-down price of $2.3m, and was then awarded more than $100m interest over 2002 and 2003. Meanwhile, a scan of the interests and hobbies section of the sovereign debt specialist’s CV reveals he is a major donor to fellow vulture capitalist Mitt Romney, and that he finds time to read – notably Commentary magazine, the monthly that started life as the voice of the liberal left before veering sharply to the neoconservative right over the1980s. No prizes for guessing which Republican bankroller also sits on the provocative magazine’s board of directors.
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Post by niseag on Oct 8, 2012 1:37:23 GMT 4
I'm ambivalent about this, while everybody is held to the debt he/she has so should a country, however only the US has the legal system which does not accept a payment restriction allowance for a sovereign state. There are cases where for example a dictatorship creates debt for a country but uses it for the personal expenses, saying"I am the State, the State is me!". Countries which convert into a democracy have a hard time explaining to their people that they have to pay up for expenses of the dictator they just got rid off. Sure that's not the case in regards of Argentina. However if a state if going under and can not pay, should it be allowed for a lender to disturb recovery with asset seizures? Even in private situation that is a consideration refused by the US system, while other systems have possibilities of handling such situations, the US unmitigated "I am God the Capitalist, my name is USA" goes to the extreme. In this situation here the vulture fund is using a NYC judgement enforces it in Africa and creates a problem, which the US judges forget could easily go against the US. Lets just say with so much US Debt outstanding and something happening delaying a payment, could a US Navy vessel get seized by lets say a Chinese Vulture Fund? and where does it end, can someone seize an Island from Greece because they are not paying their bonds? No, they say, that's sovereign but so is a military vessel, even if it is only for schooling.
I do not like where this may go!
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Post by ukipa on Oct 8, 2012 6:24:08 GMT 4
Like the article said, the tactic is known as "vulture fund". The lowest form of making money (besides stealing it).
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Post by alanbond on Oct 8, 2012 6:56:46 GMT 4
I would pay the release money in escrow and give them the lawsuit of their life, 10 years in Africa's legal hell, welcome to Africa!
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Post by Sapphire Capital on Oct 16, 2012 22:33:21 GMT 4
Follow up: BUENOS AIRES, Oct 16 (BERNAMA-NNN-MERCOPRESS) -- Two top Argentine Navy officers had been disciplined for their responsibility in plotting the course of the training frigate ARA Libertad currently retained in Ghana on an injunction from a US based hedge fund and following a failed plea last Thursday.
Argentina' Defence Minister Arturo Puricelli said the sanctions were imposed on the Argentine Navy secretary, Alfredo Mario Blanco and the former director of Organization and Doctrine, Luis Maria Gonzalez Day.
Puricelli also sent a letter to his peers from Chile, Uruguay, Paraguay, Venezuela, Brazil, Peru and South Africa requesting they collaborate in helping to find a solution to the controversy with the courts of Ghana.
All the countries have cadets of their navies in ARA Libertad, on invitation from the Argentine navy.
The two officers not only were disciplined but an administrative investigation was started "to establish responsibilities regarding the decision to have the tall ship ARA Libertad call in at the port of Tema in Ghana" said a release from the Defence Ministry.
Gonzalez Day in statements to the media had said that the decision to visit Ghana was an "inter-ministerial decision" and the definitive evaluation of the global course of the training vessel is a "cooperative process" involving several offices from the Argentine government.
However the Ministry said it has an internal communication from Alfredo Mario Blanco modifying the original course of the frigate alleging "operational reasons" and with no previous consultation process.
The training vessel from the Argentine Navy with over 200 cadets plus the crew remains at the port of Tema since 2 October following the injunction from the NML Capital hedge fund which is demanding Argentina make effective defaulted sovereign bonds dating back to 2001 and 2002.
Argentina in two stages in the last seven years restructured 93% of its defaulted debt but the so called 'vulture funds' and particularly NML Capital, holds US$1.6bn dollars in sovereign bonds and demands full face-value payment plus interest.
The fund started actions in New York and London courts and is out in the world trying to get hold of Argentine assets, such is the case of the retained frigate to recoup the value of its bonds.
Argentina argues that the frigate is protected by the diplomatic immunity under the Vienna convention.
-- BERNAMA-NNN-MERCOPRESS
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Post by Sapphire Capital on Oct 16, 2012 22:35:21 GMT 4
judge Richard Adjei Frimpong dismissed a motion by the Argentine state to free the vessel on the grounds that it counted with diplomatic immunity, according to AFP. The court sided with NML, which has gone to great lengths in their attempts to extract full compensation from the Argentine government in the aftermath of the largest sovereign debt default ever in which Buenos Aires reneged payment on approximately $100 billion in sovereign debt. Elliott Capital, via NML, was awarded $1.6 billion in restitution by U.S. District Judge Thomas Griesa in New York, and the Ghanaian court was upholding that ruling.
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