Forgione et al v. The Republic of Argentina, No. 1:2006cv15171 - Document 22 (S.D.N.Y. 2010)

Court Description: OPINION: The motions for summary judgment are granted. Judgment will be entered for the principal amount of the bonds issued under the 1994 FAA plus accrued interest. Settle judgment. (Signed by Judge Thomas P. Griesa on 9/16/2010) (jfe)
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Forgione et al v. The Republic of Argentina Doc. 22 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK -------------------------------------------x ANTONIO FORGIONE, NESTOR ALEJANDRO MORENO, JUAN CARLOS VIGANI and ADRIANA ELSA IPPOLITO, Plaintiffs, 06 Civ. 15171 (TPG) OPINION - against- USDCSONY DOCUMENT ELECfRONICAllY FILED THE REPUBLIC OF ARGENTINA, Defendant. --------------------- ---------- ---- -----x DOC #: DATE FIU:D: / !lI/l/IItJ Plaintiffs are the beneficial owners of certain bond indebtedness issued by defendant, the Republic of Argentina ("Republic"), on which the Republic defaulted in December 2001. Plaintiffs are suing to recover amounts due to them as a result of the default and have moved for summary judgment. The Republic has no objection to the entry of summary judgment. The motion is granted. FACTS 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 Corp. Ltd. v. Republic of Argentina, No. 02 Civ. 3804, 2003 WL 1878420 Dockets.Justia.com (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 also 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 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 .... 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 June 9 and June 23, 2004, plaintiffs sent notices to the Fiscal Agent of the Republic of Argentina, declaring the principal amounts of the debt securities governed by the 1994 FAA held by plaintiffs to be immediately due and payable. The bonds that are the subject of this action, and the amounts of beneficial interests owned by plaintiffs, are listed in the following tables. l Table 1. Plaintiff Bond Holder or Beneficial Owner: Face Value: ISIN No.: Date of Issuance: Date of Maturitv: Interest Rate / ï½ ï½¡ï½¶ï¼ºï½ ï½¨ï½¬ï½°ï½¾ï¼  Date of Purchase: Acceleration: Contract Documents: (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) Evidence of OwnershiQ Proffered: (Account Statements; Letters; Notarized Statements, etc.) Antonio Forgione U.S. $1,300,000 ISIN: US 040114AN02 Common Code: 007022140 Not provided October 9, 2006 11% rovided Not required FAA dated October 19, 1994 Account statement from BANCA CARIGE dated June 30, 2007 1 The court notes the distinction between bonds and beneficial interests. In some previous opinions, the court has simply referred to the plaintiffs as owners of "bonds," when in fact plaintiffs are technically owners of "beneficial interests in bonds." 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. This distinction is discussed more fully in Million Air Corp. v. Republic of Argentina, No. 04 Civ. 1048, 2005 WL 256126 (S.D.N. Y. Oct. 17, 2005). I Table 2. Plaintiff Bond Holder or Beneficial Owner: Face Value: ISIN No.: · Date of Issuance: ¢ Date of Maturitv: Interest Rate / Payable: Date of Purchase: Acceleration: Contract Documents: (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) Evidence of OwnershiQ ¢ Proffered: (Account Statements; Letters; Notarized Statements, etc.) ! Nestor Alejandro Moreno U.S. $234,000 ISIN: US 040114AR16 Common Code: 7321473 Not provided January 30,2017 11.375% Not provided December 7, 2006 FAA dated October 19, 1994 I I ! Monthly account statement from CAJA DE VALORES S.A. - BANCO PROVINCIA dated June 30, 2007 Table 3. Plaintiff Bond Holder or Beneficial Owner: Face Value: ISIN No.: ¢ Date of Issuance: Date of Maturitv: Interest Rate / Payable: Date of Purchase: Acceleration: Contract Documents: (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) Evidence of OwnershiQ Proffered: , (Account Statements; Letters; Notarized Statements, etc. Juan Carlos Vigani and Adriana Elsa Ippolito U.S. $120,000 ISIN: US 040114AN02 Common Code: 007022140 Not provided October 9, 2006 11% Not provided Not required FAA dated October 19, 1994 Monthly account statement from LLOYDS TSB dated June 30, 2007 and August 3, 2009 I i Table 4. Plaintiff Bond Holder or Beneficial Owner: Face Value: ISIN No.: Date of Issuance: Date of Maturity: Interest Rate / Payable: Date of Purchase: Acceleration: Contract Documents: (FAA; FRB; Indenture; Offering Prospectus; Certificates, etc.) Evidence of Ownershi}2 Proffered: (Account Statements; Letters; Notarized Statements, etc.) Juan Carlos Vigani and Adriana Elsa Ippolito i U.S. $550,000 ISIN: US 040114BE93 Common Code: 9639713 Not provided April 7, 2009 11.75% Not provided December 7,2006 FAA dated October 19, 1994 Monthly account statement from LLOYDS TSB dated June 30, 2007 and August 3,2009 DISCUSSION This court has already granted summary jUdgment in other cases to plaintiffs seeking to collect on the Republic's defaulted bonds issued under the 1994 FAA. See Mazzini v. Re}2ublic of Argentina, No. 03 Civ. 8120, 2005 WL 743090 (S.D.N.Y. Mar. 31, 2005). Only certain issues need to be discussed in connection with the present motion. Standing and Proof of Ownershi}2 In the two opinions in Fontana v. Re}2ublic of Argentina, 415 F.3d 238 (2d Cir. 2005), and A}2}21estein v. Province of Buenos Aires, 415 F.3d 242 (2d Cir. 2005), the Second Circuit has held that an owner of a beneficial interest, such as plaintiffs here, must receive authorization from the registered holder of the bond before it may sue, but that such authorization may be granted subsequent to the filing of a lawsuit. Alternatively, the Republic may waive the authorization requirement. The Republic has agreed to waive objections based on lack of authorization where the court makes a finding of current ownership. See Transcript, March 28, 2006, Cilli v. Republic of Argentina (04 Civ. 6594). Here, plaintiffs have adequately demonstrated through their account statements that they owned their beneficial interests as of the dates set forth in the respective declarations. There is no evidence of any change of ownership thereafter. CONCLUSION The motions for summary judgment are granted. Judgment will be entered for the principal amount of the bonds issued under the 1994 FAA plus accrued interest. Settle judgment. Dated: New York, New York September 16, 2010 Thomas P. Griesa U.S.D.J.