The opinion of the court was delivered by: THOMAS GRIESA, Senior District Judge
Plaintiff Million Air Corp. is the beneficial owner of certain
bond indebtedness issued by defendant The Republic of Argentina.
The Republic defaulted on such indebtedness in December 2001
during a profound fiscal crisis. Plaintiff is suing to recover
amounts due to it as a result of the default and has moved for
The bond indebtedness at issue is governed by a Fiscal Agency
Agreement dated October 19, 1994 (the "1994 FAA"). The 1994 FAA
is the same agreement that governed the bond indebtedness on
which this court granted summary judgment to the plaintiffs in
Lightwater Corporation Ltd. v. Republic of Argentina, No. 02
Civ. 3804, 2003 WL 1878420 (S.D.N.Y. Apr. 14, 2003). Section 22
of the 1994 FAA states that the Republic 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
1994 FAA provides that the Republic's obligations on the bonds are unconditional and
that failure to make any payment of principal or interest for 30
days after the applicable payment date constitutes an event of
default. A declaration by the Republic of a moratorium on the
payment of principal or interest on its public external
indebtedness is an event of default as well. Paragraph 12 of the
FAA provides for acceleration of principal if there is a failure
to pay interest or a moratorium. If either of these events
each holder of Securities and such Series may by such
notice in writing declare the principal amount of
Securities of such Series held by it to be due and
payable immediately. . . .
As will be described shortly, there has been some lack of
clarity as to exactly what it is that plaintiffs in these
Argentine bond cases actually own. However, in the Republic's
brief on the present motion, dated September 7, 2004, the
Republic stated that when the FAA speaks of "Securities of such
Series," it is speaking of bonds, including the bonds held by
plaintiff in this action.
On December 24, 2001 the Republic declared a moratorium on
payments of principal and interest on the external debt of the
Republic. The court refers to its previous opinions for a
description of the circumstances of these defaults. Lightwater,
2003 WL 1878420, at *2; Applestein v. Republic of Argentina,
No. 02 Civ. 1773, 2003 WL 1990206, at *1 (S.D.N.Y. Apr. 29,
2003). On February 9, 2004, the attorney for plaintiff sent
notices to Bankers Trust Company, the Fiscal Agent of The Republic of Argentina, declaring the
principal amounts of the debt securities held by plaintiff to be
immediately due and payable.
The bonds that are the subject of this action are listed
Also listed are the amounts of the beneficial interests owned
by plaintiff. The court notes the distinction between bonds and
beneficial interests. This is the first in the series of summary
judgment opinions in the Argentine bond litigation to deal with
this distinction. Heretofore, the court has simply referred to
the plaintiffs as owners of "bonds." Indeed, in its earlier brief
on this motion, the Republic referred to plaintiffs as owning
"bonds" and spoke of the "Securities," described in the FAA, as
"bonds." It must be now understood that this reference actually
means "beneficial interests in bonds."
The first time this distrinction was discussed or at least
discussed with any thoroughness was at a hearing held on
September 13, 2005. The following is a brief summary of what was
explored at great length at that hearing. The Republic actually
issues "a bond" to a depository. The depository, in some form,
issues "participations" to brokers, who sell "beneficial
interests" to purchasers. These beneficial interests are
identified by reference to the underlying bond (CUSIP or ISIN
number or both; date of issuance and maturity; rate of interest)
and the principal amount of the beneficial interest.
The following tables contain the necessary identifying
information regarding plaintiff's beneficial interests in bonds. Table 1.
Plaintiff Beneficial Owner: Million Air Corp.
Face Value: U.S. $ 212,000.00
CUSIP No., ISIN No., BB CUSIP No. 040114ANO; ISIN No. US04114AN02
Date Of Issuance: ...