- Last Updated: 12:22 AM, June 26, 2012
- Posted: 11:56 PM, June 25, 2012
Strike two against Paul Singer’s Elliott Management.
The $20 billion New York hedge fund lost its second battle in the last few weeks to win control of $2 billion in Argentina debt when the US Supreme Court turned aside its appeal.
Singer claims he is entitled to the cash stash after Argentina defaulted on its debt — but a lower appeals court has ruled the hedge fund titan cannot collect certain funds that are currently on deposit at the New York Fed.
The case turned aside yesterday by the court involves a claim by Singer and fellow vulture investor Kenneth Dart for $105 million at the New York Fed.
Both investors refused to go along with most other investors when the country restructured its debt in 1996.
Singer and Dart buy defaulted sovereign debt for pennies on the dollar — then seek ways of collecting up to the full face amount.
The Argentina case could weaken the duo’s entire business plan, experts said.
“What’s at stake is the business model,” said Anna Gelpern, sovereign debt expert and law professor at American University Washington College of Law.
Yesterday’s action was not unexpected.
Stephen Vladeck, professor of constitutional law at American University, said the High Court would only take a case involving sovereign debt if “Washington asks the Court to intervene or the lower courts are divided.”
Neither was the case with Singer’s Argentina appeal.
“We are gratified that the Supreme Court did not believe that the decision of the [lower appellate court], which was clearly correct, warranted further review,” said Jonathan Blackman, the Cleary Gottlieb Steen & Hamilton lawyer representing Argentina.
The Supreme Court rebuff comes just weeks after the New York Legislature refused to pass a bill that would have pressured the South American country to settle. Elliott has been trying to get the bill passed for two years.