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MACROTECNIC INTERNATIONAL CORP. v. REPUBLIC OF ARGENTINA

United States District Court, S.D. New York


March 12, 2004.

MACROTECNIC INTERNATIONAL CORPORATION, Plaintiff, -against- THE REPUBLIC OF ARGENTINA, Defendant LATINBURG S.A., Plaintiff, -against- THE RFPITRI 1C OF ARGENTINA, Defendant HERNAN LOPEZ FONTANA and MARIA A MORI DE LOPEZ, Plaintiffs, -against- THE REPUBLIC OF ARGENTINA, Defendant MILLION AIR CORP., Plaintiff, -against- THE REPUBLIC OF ARGENTINA, Defendant DENCHU INVESTMENT CORP., Plaintiff, -against- THE REPUBLIC OF ARGENTINA, Defendant GUILLERMO FRANCO et al., Plaintiffs, -against- THE REPUBLIC OF ARGENTINA, Defendant

The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge

ORDER

WHEREAS plaintiff Macrotecnic International Corporation ("Macrotecnic") has a judgment against the Republic of Argentina; and

WHEREAS on February 12, 2004, Macrotecnic moved for an ex parte writ of execution against bank accounts in the name of Correo Argentine, S.A. ("Correo") maintained in the New York branches of Lehman Brothers and BNP Paribas (the "Banks"); and

  WHEREAS on February 13, 2004 the Court issued an order permitting Macrotecnic to serve restraining notices pursuant to CPLR § 5 222 against Correo's accounts at the Banks (the "Accounts"), and directing the Republic to show cause why a writ of execution should not be granted; and, Page 3 WHEREAS on February 17, 2004 plaintiffs Latinburg, S.A., Denchu Investment Corporation, Guillermo Franco, Rafael Franco, and Luisa Franco, and Panamel S.A., Hernan Lopez Fontana and Mariana Mori de Lopez, and Million Air Corp. (the "pre-judgment plaintiffs"), moved for a temporary restraining order and order of pre-judgment attachment against the Accounts; and,

  WHEREAS on February 17, 2004 the Court issued a temporary restraining order permitting the pre-judgment plaintiffs to restrain the Accounts and directing the Republic to show cause why an Order of Attachment should not be issued; and,

  WHEREAS a court hearing was held on February 17, 2004 concerning all of plaintiffs' restraints on the Accounts (the "Restraining Notices") at which the Court ordered (i) the temporary extension of the Restraining Notices and (ii) that plaintiffs file an expedited motion to confirm the Restraining Notices; and,

  WHEREAS on February 19, 2004, plaintiffs filed a motion to confirm the Restraining Notices; and,

  WHEREAS on February 24, 2004, upon motion by plaintiffs, the Court issued an order (i) authorizing service upon Correo and the Trustee in the insolvency proceedings of Correo in Argentina (the "Trustee"), so that either or both of them may appear and state their position with respect to the Accounts, (ii) continuing the February 17, 2004 temporary restraining order with respect to the Lehman account; and (iii) scheduling a hearing on March 5, 2004;and,

  WHEREAS on March 3, 2004 the Republic filed a brief in opposition to the motion to confirm the Restraining Notices; and, Page 4

  WHEREAS on March 3, 2004 Correo and the Trustee filed the declaration of Julio C. Rivera, legal advisor to the Trustee; and,

  WHEREAS a hearing was held on March 5, 2004 at which the Court heard oral argument from counsel for the parties and for Correo and the Trustee on plaintiffs' motion to confirm the Restraining Notices: and,

  WHEREAS following the March 5, 2004 hearing the parties made further submissions; and,

  WHEREAS based on the submissions of the parties and by Correo and the Trustee, this Court finds that plaintiffs have not met their burden of establishing that the Republic has an attachable interest in the Accounts;

  IT IS HEREBY ORDERED that.

  1. Plaintiffs' motion to confirm the Restraining Notices is denied.

  2. The Restraining Notices and temporary restraining orders are vacated.

  3. Plaintiffs' motions for Writ of Execution and for Pre-judgment Attachment of the Accounts are denied.

  SO ORDERED Page 1

  DECLARATION OF LEONARDO MADCUR

  Pursuant to 28 U.S.C. § 1746 Leonardo Madcur declares as follows:

  1. I am the Secretary of Technical Coordination of the Ministry of Economy and Production of the Republic of Argentina (the "Republic"). I am authorized to make this declaration on behalf of the Republic.

  2. The Republic declares that it does not own and has no property interest in the accounts of Correo Argentine S.A. ("Correo") located at the New York branches of Lehman Brothers and BNP Paribas (the "Accounts").

  3. The Republic has not, by Executive Decree 1075/03, terminating its Concession Agreement with Correo, or otherwise, asserted ownership of or any interest in the Accounts. The Republic has no right under the Concession Agreement of August 26, 1997 Page 2 between the Republic and Correo to take ownership or possession of the Accounts, cannot do so and does not intend to attempt to do so.

  4. The Republic has no power to direct the disposition of the funds in the Accounts. Under Argentine law, the only body with authority over the Accounts is the Juzgado National de Primera Instancia en lo Comercial No. 9 (National Commercial Court in the First Instance No. 9 or the "Argentine Court"), which must administer those funds in accordance with the Argentine Ley de Concursos y Quiebras (the Argentine Insolvency and Bankruptcy Law or the "Insolvency Law"). Under the Insolvency Law, the Republic has no right to the property of Correo, and is simply one of Correo's hundreds of unsecured general creditors.

  5. On December 16, 2003, the Argentine Court decreed the bankruptcy of Correo. This decision has been stayed pending appeal. As a precautionary measure, on 22, 2003, the Argentine Court ordered that the Accounts be frozen.

  6. If the Argentine Court's December 16, 2003 decision that Correo be placed into bankruptcy were reversed on appeal, Correo would remain in insolvency proceedings (the concurso). The Accounts would continue to be administered under the supervision of the Argentine Court and the Trustee in the concurso. Under these circumstances, the Republic would continue to have no right to or power over the Accounts.

  7. If the Argentine Court's December 16, 2003 Bankruptcy Decree were affirmed on appeal, then Correo would go into liquidation. The Accounts would become part of Correo's bankruptcy estate, which would be administered by the Argentine Court and the Trustee. In this situation, the Republic would still have no right to or control over the Accounts. Page 3

  I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct.

  Executed on in Buenos Aires, Argentina.

20040312

© 1992-2004 VersusLaw Inc.



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