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ALLAN APPLESTEIN TTEE FBO D.C.A. GRANTOR TR. v. PROV.

April 25, 2003

ALLAN APPLESTEIN TTEE FBO D.C.A. GRANTOR TRUST, PLAINTIFF, AGAINST THE PROVINCE OF BUENOS AIRES, DEFENDANT.


The opinion of the court was delivered by: Thomas P. Griesa, United States District Judge.

OPINION

Plaintiff is the owner of a note issued by The Province of Buenos Aires, Argentina. The Province has defaulted on the note. Plaintiff has brought sues to recover amounts due it by virtue of this default. The Province has answered denying liability and counterclaiming for tortious interference with prospective contractual relations.

Plaintiff has moved for summary judgment on its claims under the note, and to dismiss the counterclaim. The Province opposes plaintiff's motion, and has cross-moved for a stay on the grounds that the Province is engaged in efforts to achieve a debt restructuring.

The following rulings are made based upon a reconsideration of an earlier ruling of September 5, 2002, denying all motions.

Plaintiff's motions are granted. The Province's motion for a stay of the proceedings is denied, except that the court stays execution of plaintiff's judgment until May 14, 2003. A similar stay has been granted until May 14 in certain actions brought against the Republic of Argentina.

Facts

Plaintiff's Note and the Default

A copy of the note itself has not been submitted to the court. However, both sides rely on the indenture and pricing supplement for the note as accurately stating its terms and conditions.

Plaintiff purchased a $1,020,000 face value note on July 12, 2000. The note is part of $100,000,000 in 12.75% notes, issued July 13, 2000 and due for principal payment on August 1, 2003, with interest to be paid on February 1 and August 1 of each year.

The terms of the $100,000,000 notes are contained in the July 8, 1998 Indenture for $650,000,000 Euro Medium-Term Notes. The indenture provides (Section 501) that failure to make any payment of principal or interest for 30 days after the applicable payment date constitutes an event of default. The Province's or the Republic of Argentina's declaration of a moratorium on the payment of indebtedness is also listed as an event of default. In order to declare an outstanding principal amount immediately due and payable, the claimant must hold at least 25% of the aggregate principal amount of the outstanding notes of the series. Since plaintiff does not have such a holding, it can only claim unpaid interest.

The indenture states (Section 113) that the Province waives sovereign immunity and consents to jurisdiction in any state or federal court in the borough of Manhattan in the City of New York. The indenture also states (section 111) that it is to be governed by and construed in accordance with the laws of the State of New York.

The indenture further states (Section 301) that the note is a "legal, valid and binding" obligation of the Province enforceable against the Province.

On January 29, 2002 the Province announced a moratorium on the payment of any interest or principal. Principal is not yet due, but the Province has missed the following scheduled interest payments:

February 1, 2002: ...


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