Opinion ID: 2616
Heading Depth: 1
Heading Rank: 3

Heading: APE Approval in Argentine Court and Cancellation of (Most of) the Old Debt

Text: Telecom submitted the proposed APE plan to an Argentine commercial court for approval on October 21, 2004. Pursuant to the court's order, Telecom held a noteholders' meeting (after providing the required notice) at which all noteholders participating in person or by proxy cast ballots in favor of the plan. Argo, a creditor of Telecom that now owns over US$ 35 million in Telecom notes, [4] did not participate. The Argentine court accepted the APE as having been validly approved by the requisite majorities under Argentine law. Creditors were then given the opportunity to file objections to the plan, and four objections were raised. [5] Argo again did not participate in the objection process. The Argentine court rejected the objections and approved the APE plan by order of May 26, 2005. It concluded: [T]aking into consideration the restructuring sought as a means of turning around the business crisis, the elements provided to the case [sic] by the debtor and those required by the court, such proposal does not appear to be abusive, fraudulent or discriminatory in accordance with the applicable legal regulations. While Telecom was conducting the court approval process and prior to closing on the restructuring, Argo contacted U.S. Bank, the indenture trustee for the Old Debt, and instructed it not to exchange Argo's notes. U.S. Bank agreed not to cancel or transfer Argo's notes, but stated that its agreement is subject to actions that [it] may be legally required to take pursuant to or under force of law. In the course of its discussions with Telecom, U.S. Bank indicated that it would not take any action to cancel the Old Debt held by non-consenting creditors unless it received an order from a U.S. court directing it to do so. Telecom asked U.S. Bank to cancel the remaining Old Debt for non-consenting creditors in accordance with the APE, but U.S. Bank refused. The closing occurred on August 31, 2005. Approximately US$ 80 million in Old Debt held by non-consenting creditors was not cancelled and was placed in a trust.