Paul Singer, the billionaire hedge fund manager, has claimed victory in a lawsuit to force Argentina to fork out almost 17 times more than he paid to buy bonds issued by the country.
After Argentina’s economy crashed in 2001 and it defaulted on $80 billion in bonds, Singer’s Elliott Capital Management paid $49 million to buy $220 million in Argentine debt. Over the last 13 years, the value of these bonds has risen to $832 million which Singer wants paid off in full. Singer has been joined by several other Wall Street speculators such as Aurelius Capital Management and Blue Angel who together hold a total of $1.3 billion in Argentine debt.
In the meantime, after extensive negotiations, almost all other holders of Argentina’s total $93 billion in debt agreed to forgive as much as 70 percent of what they were owed, recognizing that the country was in dire financial straits.
“Society needs a way to allow people to start over again. This is why we have bankruptcy,” writes Martin Wolf in the Financial Times. “Indeed, we allow the most important private actors in our economies — companies — to enjoy limited liability. The ease with which US corporations can walk away from their creditors is breathtaking. A similar logic applies to countries.”
But there is no international bankruptcy court for countries. Instead, beginning in 2009, Singer and his friends took advantage of the fact that much of the debt was issued under New York laws and went after Argentina in U.S. courts.