U.S. Supreme Court rejects Argentina’s appeal in debt case by Tom Huddleston, Jr. @FortuneMagazine June 16, 2014, 1:08 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons The U.S. Supreme Court said in a brief written order Monday morning that it will not review a lower court’s decision to force Argentina to pay out defaulted bonds to a group of holdout creditors. The country defaulted on $100 billion in debt in 2001, during its economic crisis, and had previously reached agreements with 93% of its creditors to pay discounted restructured debt in exchange for the defaulted bonds. But, the remaining creditors balked at the lower payments, and are now demanding more than $1.3 billion they claim to be owed. Those holdout hedge funds, who are led by Elliot Management unit NML Capital and Aurelius Capital Management, subsequently sued Argentina in U.S. federal court in New York and won a 2012 decision ordering the country to pay the money it owes the disgruntled bondholders into a court-controlled escrow account while also continuing pay the creditors who accepted the restructured agreements. Last year, a federal appeals court upheld that decision. Argentina argued in previous Supreme Court filings that the country would be “at imminent risk of default” from any court order forcing payment to the holdout creditors while it also serves its restructured debt. The bondholders have said that Argentina is exaggerating its inability to pay and they have urged the Supreme Court to not review the previous decisions of a New York federal judge and the Second U.S. Court of Appeals because, the bondholders said, Argentina would likely ignore any ruling against it in the case anyway. Already, the Supreme Court’s decision has had a negative effect on Argentina’s markets. In Buenos Aires, the MERVAL index plummeted nearly 6.9% and 550 points within a couple of hours of the high court’s denial. Meanwhile, the Supreme Court also sided against Argentina in a related case dealing with the issue of whether or not the holdout creditors can force a pair of banks in New York to disclose information on Argentina’s non-U.S. assets to the debtors seeking repayment. Argentina had argued that it was protected under the Foreign Sovereign Immunities Act (FSIA), but Justice Antonin Scalia argued in his majority opinion that the act does not preclude post-judgment discovery of Argentina’s worldwide assets. Scalia wrote in his opinion that Argentina’s “argument founders at each stop,” noting that the country offered no suitable precedent for its claims. He adds that NML Capital must be allowed to discover what worldwide assets Argentina holds, and where they are, before it can be determined in court whether or not those assets are up for grabs when it comes to the country repaying its debt to the bondholders. “To be sure, [NML Capital’s] request is bound to turn up information about property that Argentina regards as immune,” Scalia writes in his opinion. “But NML may think the same property not immune. In which case, Argentina’s self-serving legal assertion will not automatically prevail; the District Court will have to settle the matter.” Justice Ruth Bader Ginsburg wrote the dissenting opinion in the 7-1 vote, arguing that the post-judgment discovery should be limited only to Argentina’s commercial assets and should exclude military assets.