NEW YORK (Reuters) - The U.S. government is asking a federal appeals court to uphold the lifting of injunctions that have restricted Argentina from paying off some of its debts given the country’s efforts to settle litigation over bonds in default since 2002.
The U.S. government has “significant foreign policy interests in supporting a swift resolution to this long-running litigation,” the U.S. Justice Department said in a brief filed on Wednesday with the 2nd U.S. Circuit Court of Appeals in New York.
The Justice Department asked the court to uphold a March 2 ruling by U.S. District Judge Thomas Griesa in Manhattan that approved lifting injunctions he had issued in the case after Argentina made a $6.5 billion offer to settle the litigation.
The Justice Department argued vacating the injunctions would back the U.S. government’s interests in supporting Argentine President Mauricio Macri’s efforts to reverse prior economic policies and strengthen the country’s economy.
Representatives for creditors in the case including Elliott Management’s NML Capital Ltd either declined comment or had no immediate comment.
The brief was filed amid a visit to Argentina by U.S. President Barack Obama, who on Wednesday praised the pace of reforms taken by Macri, the country’s new center-right leader, to strengthen the economy.
It came despite requests to the Justice Department in recent days by some bondholders who had not reached settlements with Argentina that it not back the country.
Griesa’s ruling vacating the injunctions was conditioned on Argentina repealing two laws concerning its debts and paying creditors who by Feb. 29 reached settlements with the country.
Argentina made the request to lift the injunctions after offering on Feb. 5 to settle lawsuits by various bondholders stemming from its record $100 billion default in 2002.
The injunctions at issue prevented Argentina from servicing its restructured debt until it paid the investors, who spurned its 2005 and 2010 debt restructurings.
Those restructurings resulted in 92 percent of its defaulted debt being swapped and investors being paid less than 30 cents on the dollar.
Argentina has reached agreements in principle to pay more than $6.5 billion to creditors, including $4.65 billion to four of the biggest creditors in the dispute, including NML Capital and Aurelius Capital Management.
Despite those deals, bondholders including NML are appealing Griesa’s ruling, calling it flawed and arguing Griesa abused his discretion.
Reporting by Nate Raymond in New York; Editing by Chizu Nomiyama and Meredith Mazzilli