Alerts

Second Circuit Upholds 101% Annual Interest Rate on Argentine Bonds

September 30, 2010

On September 23, 2010, the U.S. Court of Appeals for the Second Circuit upheld an annual interest rate of 101% (based on an interest rate formula) owed on Argentine government bonds. Argentina had attacked the enforceability of the interest provision, arguing it was unenforceable as a penalty, substantively unconscionable or void as usurious. The Second Circuit, however, rejected Argentina's arguments. NML Capital Ltd. v. Argentina, No. 09-2707, slip op. at 1 (2d Cir. Sep. 23, 2010). The court also considered whether statutory interest should accrue on unpaid bond interest after maturity and after acceleration, and it formally requested that the New York Court of Appeals consider the statutory interest issues. Id. at 28-30.