Wall Street vs. Buenos Aires

Bondholders spark U.S. legal drama over Argentine debt

A crucial ruling is expected on payment for group of holdouts that refused to settle with Argentina after it defaulted on nearly $100 billion in debt in 2002.

By Ken Bensinger, Los Angeles Times
5:47 PM PDT, May 27, 2013

Collection agencies profit by buying up old debt, chasing borrowers for payment and, when all else fails, using the courts to recover as much as they can.

It's a business model polished and perfected over decades of litigation. But what if the deadbeat is a sovereign nation of 40 million people whose fiery president has sworn never to pay?

That question now faces the U.S. 2nd Circuit Court of Appeals in New York, which has become an unlikely referee in a high-stakes grudge match pitting Wall Street investors against Argentina.

At its heart, the case tests the power of U.S. courts to force other countries to honor their debts. The outcome could hinder the ability of other struggling nations — including Greece and Cyprus — to renegotiate their commitments, potentially saddling them with crushing obligations they can't escape.

(More here.)