Argentina asks top US Court to stop ‘catastrophe’

BUENOS AIRES, Argentina — Argentina filed a long-shot appeal to the U.S. Supreme Court on Tuesday asking the justices in Washington to avert an “economic catastrophe” by overturning lower court rulings that could force the South American government to default on billions of dollars in debts.

Forcing Argentina to pay investors who didn’t accept bond swaps in exchange for defaulted debt could destabilize the global economy by making other voluntary debt restructurings “substantially more difficult, if not impossible,” the petition says.

“Full payment of the holdouts would cut Argentina’s reserves approximately in half, an unimaginable result for any nation,” Argentina’s lawyers argued. “Any sovereign would protest if a foreign court issued an extraterritorial order threatening its creditors and citizens and coercing it into turning over billions of dollars from its immune reserves.”

By ignoring the federal sovereign immunity law that normally protects other countries’ assets from seizure outside the United States, the lower court decisions could make U.S. assets overseas vulnerable to similar seizures by other governments, the petition said.

Hedge fund billionaire Paul Singer won a $1.3 billion judgment against Argentina in the debt dispute, but has never been able to collect despite sending lawyers around the world to try to seize Argentine assets.

The Supreme Court already agreed to hold an April 21 hearing on Argentina’s appeal of a ruling enabling Singer’s NML Capital Ltd. to force several banks to disclose the country’s assets. But that’s a side issue, while Tuesday’s appeal reaches to the heart of the case, which will set a precedent for all the remaining interests that hold debts Argentina hasn’t paid since its 2001 economic crisis.

Argentina’s appeal said leaving the lower court rulings in place would give it the equally devastating choices of emptying its treasury or defaulting on another $24 billion in debt it has been faithfully repaying.