Elliott Associates, L.P. v. Republic of Panama
United States District Court for the Southern District of New York
975 F. Supp. 332 (1997)
- Written by Steven Pacht, JD
Facts
In 1995, the Republic of Panama (Panama) (defendant) restructured its foreign debt via a 1995 financing plan (plan). The plan included Panama’s $225 million debt from 1982. The 1982 loan agreement provided that it could be amended with the written consent of a majority of the lenders. The plan included interim measures that required each creditor holding restructuring-eligible debt to agree (1) not to recognize or record any assignments after the plan’s October 20, 1995, final trading date and (2) to settle any pre-October assignments by November 10. In addition, all participating creditors were required to submit to Panama a commitment letter by November 14 by which the creditors would, among other things, consent to the interim measures and agree to make any subsequent assignments only to persons who agreed to be bound by the plan. Citibank, N.A. and Swiss Bank Corporation (collectively, banks) were creditors under the 1982 loan agreement. In late October 1995, the banks assigned their interests in approximately $12 million of Panama’s 1982 debt to Elliott Associates, L.P. (Elliott) (plaintiff) while also retaining a portion of the 1982 debt. Although the banks (along with all other 1982 debt holders) agreed to the plan, Elliott did not. Instead, in July 1996, Elliott sued Panama for breach of contract, seeking payment of amounts allegedly due under the 1982 loan agreement. In response Panama contended, among other things, that the banks’ assignments to Elliott were invalid because Elliott obtained the 1982 debt after the October 20 final-trading date. Specifically, Panama cited the assignment notices that the banks and Elliott submitted to Panama and the plan’s agent that were dated after October 20 and that specified post-October 20 effective dates. Per Panama, the assignment notices showed that the Elliott assignments occurred after October 20. However, in December 1995, the agent had acknowledged the Elliott assignments, registered Elliott as a 1982-agreement creditor, and, with Panama’s knowledge, paid more than $900,000 in 1982-loan interest to Elliott. Panama further contended that even if the Elliott assignments were valid, Elliott had to restructure its debt because in their November 14 commitment letters, the banks agreed not to assign their debt to anyone who did not agree to be bound by the plan. In addition, Panama asserted a counterclaim for tortious interference with Panama’s contracts with the banks. Elliott moved for summary judgment on its contract claim and against Panama’s counterclaim.
Rule of Law
Issue
Holding and Reasoning (Chin, J.)
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