Opinion ID: 221341
Heading Depth: 2
Heading Rank: 2

Heading: The Ongoing Validity of CVI's Attachments

Text: The next question is whether the district court properly modified the attachments to allow the exchange. New York law allows a court to modify or vacate an attachment only on certain specified grounds. See N.Y. C.P.L.R. 6223. In our earlier decision, we concluded that CVI satisfies all of the statutory requirements for obtaining an order of attachment and sustaining it against a motion to vacate. 443 F.3d at 219-20 (emphasis added). Specifically, we found that: (a) CVI showed a statutory ground for attachment under N.Y. C.P.L.R. 6201(1) because Argentina concededly is not a domiciliary of the State of New York, and CVI has a cause of action against Argentina for breach of contract. (b) CVI met the further requirements of N.Y. C.P.L.R. 6212(a) because [t]here was no evidence of any counterclaim against CVI, and the district court found that CVI is likely to succeed on the merits. (c) CVI sought to attach an attachable property interest under N.Y. C.P.L.R. 6202 and 5201(b) because, [a]lthough the likelihood that the Principal Collateral attributable to the tendered bonds would revert to Argentina was exceedingly small in light of the Continuation of Collateral Agreement, that reversionary interest existed, was assignable and transferable, and therefore was subject to attachment. CVI I, 443 F.3d at 219-20 & n.4. We also addressed CVI's ability to sustain its attachments against a motion to vacate them. Under N.Y. C.P.L.R. 6223(b), a plaintiff faced with a motion to vacate or modify an attachment must show that it still meets the above requirements and must also show the need for continuing the levy. We found it beyond question that CVI has need for the attachment. CVI I, 443 F.3d at 219. [3] The situation before us, five years later, presents no relevant change. If anything, CVI's position is stronger because no continuation of collateral agreement protects these tendering Brady bondholders. CVI therefore meets the statutory standards at least as well as it did in 2006. When a plaintiff meets these standards, we held in CVI I, the district court's discretion does not permit denial of the remedy for some other reason, at least absent extraordinary circumstances and perhaps even then. Id. at 222. Because we saw no extraordinary circumstances present in 2006, we did not reach whether New York law allows discretionary denial (or modification or vacation) of an otherwise appropriate attachment based on public policy. Id. at 222-23. That question will remain open because we again find no circumstances to warrant such a discretionary modification even assuming its possibility. Argentina points to two aspects that might make this case extraordinary. First, it emphasizes the plight of the holders of the Brady bonds, who are the beneficiaries of the collateral yet who will not be able to access it until 2023 thanks to CVI's attachments. But it is inevitable that attachments will have consequences for third parties, and sometimes even third parties who themselves share an interest in the relevant assets. See, e.g., In re Amaranth Nat. Gas Commodities Litig., 711 F.Supp.2d 301, 313 (S.D.N.Y.2010) (allowing attachment on assets of hedge fund even with effect of harming innocent investors in the fund). Here, the consequences are not dire. The bondholders will get no less than they originally bargained for; they lose only their flexibility to arrange a different deal. It is unfortunate, from their perspective, that CVI gets to play the role of the spoiler and to try to extract concessions from Argentina at their expense. But that is just a consequence of CVI's exercising the rights to which it is entitled under New York law, as recognized in our prior opinion. If the bondholders have liquidity needs that will not permit them to wait until 2023 for their collateral, they may sell their bonds in the secondary market for distressed debt (a market with which many players here are, no doubt, already familiar). And, of course, to the extent Argentina really wants to help its bondholders, it is free to pay them some or all of the money it owes them. Argentina's other argument for a discretionary modification focuses on its own interests as a sovereign country trying to clean up its balance sheet in the wake of an economic crisis. But the projected exchange is relatively small by the standards of international finance, and especially compared to Argentina's 2005 exchange, with the potentially tendered bonds here only amounting to roughly one hundred million dollars in face value. Argentina provides no evidence that failure to do this deal will have a substantial effect on its finances or its ability to access the capital markets. We therefore find no circumstance extraordinary enough to justify a discretionary modification of the attachments, even assuming the possibility of such a modification.