Justia Banking Opinion Summaries

Plaintiffs, companies that acquired Floating Rate Accrual Notes (FRANs), commenced numerous separate actions against Argentina seeking damages for the nation's default on the bonds and the claims were subsequently consolidated. At issue, through certified questions, was whether Argentina's obligation to make biannual interest-only payments to a bondholder continued after maturity or acceleration of the indebtedness, and if so, whether the bondholders were entitled to CPLR 5001 prejudgment interest on payments that were not made as a consequence of the nation's default. The court answered the certified questions in the affirmative and held that the FRANs certificate required the issuer to continue to make biannual interest payments post-maturity while the principal remained unpaid; having concluded that the obligation to make biannual interest payments continued after the bonds matured if principal was not promptly repaid, and that nothing in the bond documents indicated that the payments were to stop in the event of acceleration of the debt, it followed that Argentina's duty to make the payments continued after NML Capital accelerated its $32 million of the debt in February 2005; and based on the court's analysis in Spodek v. Park Prop. Dev. Assoc., the bondholders were entitled to prejudgment interest under CPLR 5001 on the unpaid biannual interest payments that were due, but were not paid, after the loads were either accelerated or matured on the due date.

After the the defendants defaulted on $39 million in loans the bank began post-judgment enforcement proceedings. Defendants were "sluggish" in responding to citations and the bank learned that they had transferred about $20 million to accounts in India. The district court ordered defendants to surrender their passports pending return of the funds. The Seventh Circuit affirmed. The district court had the power to impose a minimal seizure on the defendants until they abided by the asset production order or explained why they could not.