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Pasquali v. Republic of Argentina

November 14, 2006

SOCRATE PASQUALI, ET AL. , PLAINTIFFS,
v.
THE REPUBLIC OF ARGENTINA, DEFENDANT.



The opinion of the court was delivered by: Thomas P. Griesa, U.S.D.J.

OPINION

Plaintiffs are the beneficial owners 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. Plaintiffs are suing to recover amounts due to them as a result of the default and have moved for summary judgment. Plaintiffs also move to strike the Republic's discovery requests.

The motions are granted.

FACTS

The bond indebtedness at issue is governed by one of three agreements: (1) a Fiscal Agency Agreement dated October 19, 1994 (the "1994 FAA"), (2) a Fiscal Agency Agreement dated December 10, 1993 (the "1993 FAA"), and (3) a Floating Rate and Bond Exchange Agreement dated December 6, 1992 (the "FRB Agreement"). 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, Section 20 of the 1993 FAA, and Section 6.07 of the FRB Agreement state 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. All three agreements provide 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 1994 FAA provides for acceleration of principal if there is a failure to pay interest or a moratorium. If either of these events occurs,

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 . . . .

The 1993 FAA contains similar language.

The FRB Agreement permits acceleration of principal only by holders of at least 25% in aggregate of the outstanding principal amount of the bonds under each agreement.

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 December 15, 2005, plaintiffs sent notices to Bankers Trust Company, the Fiscal Agent of The Republic of Argentina, declaring the principal amounts of the debt securities governed by the 1994 FAA and 1993 FAA held by plaintiff to be immediately due and payable.

The bonds that are the subject of this action are listed hereafter. Also listed are the amounts of the beneficial interests owned by each plaintiff. *fn1

The following tables contain the necessary identifying information regarding each plaintiff's beneficial interests in bonds.

Table 1.

Plaintiff Beneficial Owner:Ricardo Kaufmann Face Value:U.S. $5,000.00 CUSIP No., ISIN No., BB No:CUSIP No. 040114AH3; ISIN No. US040114AH34 Date Of Issuance:December 20, 1993. Date Of Maturity:December 20, 2003. Interest Rate/Payable:8.375 % Date Of Purchase:On or about December 23, 1996. Acceleration:Notice sent December 15, 2005. Contract Documents: (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)FAA dated December 10, 1993. Evidence of Ownership Proffered: (Account Statements; Letters; Notarized Statements, etc.)- Account statement from Wachovia Securities dated April 30, 2006.

Table 2.

Plaintiff Beneficial Owner:Ricardo Kaufmann Face Value:U.S. $15,000.00 CUSIP No., ISIN No., BB No.:CUSIP No. 040114AN0; ISIN No. US04114AN02 Date Of Issuance:Not provided. Date Of Maturity:October 9, 2006. Interest Rate/Payable:11 % Date Of Purchase:On or about March 12, 1997, July 7, 1997 and April 21, 1998. Acceleration:Notice sent December 15, 2005. Contract Documents: (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)FAA dated October 19, 1994. Evidence of Ownership Proffered: (Account Statements; Letters; Notarized Statements, etc.)- Account statement from Wachovia Securities dated April 30, 2006.

Table 3.

Plaintiff Beneficial Owner:Ricardo Kaufmann Face Value:U.S. $10,000.00 CUSIP No., ISIN No., BB No.:CUSIP No. 040114AR1; ISIN No. US040114AR16 Date Of Issuance:January 30, 1997. Date Of Maturity:January 30, 2017. Interest Rate/Payable:11.375 % Date Of Purchase:On or about March 12, 1997, July 7, 1997 and April 21, 1998. Acceleration:Notice sent December 15, 2005. Contract Documents: (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.)FAA dated October 19, 1994. Evidence of Ownership Proffered: (Account Statements; Letters; Notarized Statements, etc.)- Account statement from Wachovia Securities dated April 30, 2006.

Table 4.

Plaintiff Beneficial Owner:Maria Silvia Cinquemani and Miguel Angel Bitto Face Value:U.S. $32,000.00 CUSIP No., ISIN No., BB No.:CUSIP No. 040114AN0; ISIN No. US040114AN02 Date Of Issuance:September 10, 1996. Date Of Maturity:September 10, 2006. Interest Rate/Payable:11 % Date Of Purchase:On or about June 1, 2000 and February 26, 2001. Acceleration:Notice sent December 15, 2005. Contract Documents: (FAA; Indenture; Offering Prospectus; Certificates, etc.)FAA dated October 19, 1994. Evidence of ...


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