Historic Republic of Argentina Sovereign Debt Litigation and Bond Offering

On April 22, 2016, the U.S. District Court for the Southern District of New York issued the latest in a series of orders that have paved the way for Argentina to return to the global capital markets for the first time since 2001. The order followed a string of victories for Argentina in the District Court and in the U.S. Court of Appeals for the Second Circuit over just a few months, for which partner Michael A. Paskin was featured as “Litigator of the Week” in The Am Law Litigation Daily.

In 2001, the Republic of Argentina defaulted on approximately $80 billion in sovereign debt. Argentina restructured most of that debt over the next decade, but many “holdout” bondholders continued to litigate their claims. In 2012 and 2015, the holdouts obtained extraordinary injunctions that prevented Argentina from making payments to holders of the restructured debt without making ratable payments to the holdouts. For years, Argentina refused to pay the holdouts, which put it in a cycle of perpetual default on its sovereign debt obligations.

In December 2015, Argentina elected Mauricio Macri as its new President. Argentina’s new government retained Cravath in February 2016 to represent the Republic in its efforts to obtain relief from the injunctions and resolve the 15‑year holdout litigation. That litigation strategy was critical to the Macri administration’s broader economic plans, as it would allow Argentina to return to the global capital markets.

On February 11, 2016, the Cravath team moved in the District Court for an order conditionally vacating the injunctions. At that time, Argentina had entered into settlements totaling over $1 billion with certain holdout bondholders and had issued a public proposal to settle the remaining claims.

On March 2, 2016, the District Court granted Argentina’s motion to conditionally vacate the injunctions. Many of the holdouts appealed to the Second Circuit and, following expedited briefing, the Second Circuit heard oral argument on April 13, 2016. Immediately following oral argument, the Second Circuit issued a rare ruling from the bench affirming the District Court’s order.

On April 22, 2016, the District Court entered an order granting final relief from the injunctions, concurrent with the payment of settlements in connection with the closing of Argentina’s $16.5 billion bond offering, the largest emerging market debt issuance in history. In addition to the Firm’s role as litigation counsel, Cravath also acted as special counsel to Argentina in connection with the bond offering.

The Cravath team was led by partner Michael A. Paskin and included partners Daniel Slifkin and Damaris Hernandez and associates David A. Herman, M. Brent Byars, Matthew P. Hendrickson, Oliver Rocos, Sue Lin and Alexandra L. Larkin and foreign associate attorney Jose Palomar on litigation matters and partners Paul H. Zumbro and Craig F. Arcella and associates Edward J. Reed and Nicholas A. Hyde on corporate matters.