US Hedge Fund Billionaire Seizes Argentine Navy Tall Ship Libertad in Ghana Over Debt Dispute

The Argentine Navy training ship Libertad and her crew of over 200, docked in port of Tema, Ghana, were seized by a court order obtained by NML Capital Ltd., a subsidiary of Elliot Capital Management, a hedge fund run by the US billionaire Paul Singer.  Argentina’s Foreign Ministry accused the Ghanaian court of violating rules of diplomatic immunity.

The conflict is over a more than a decade long legal battle between Argentina and hold-out creditors. In 2001 and 2002 Argentina defaulted on more than $100bn of debt, the biggest default in history. About 94% of these loans were restructured in 2005 and 2010, returning creditors roughly 30 cents on their dollar. Elliot Capital was among the 6% who did not participate in the restructuring and continued with legal action against Argentina.

Paul Singer is well known as a “vulture capitalist” whose business model is to buy distressed debt cheaply and to sell it at a profit or to sue for full payment.  Singer is a major donor to the Republican Party.   Reportedly, the ship and crew will be released on the payment of a bond.

Argentine Navy ship nabbed by bondholder

The Libertad and its 200 strong crew of Naval cadets on their graduation tour can only leave port if the Argentine government posts a bond with the court in Ghana, which the hedge fund could then seek to recover.

In this case, at least, the tactics used by Somali pirates and vulture capitalists seem remarkably similar.

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3 Responses to US Hedge Fund Billionaire Seizes Argentine Navy Tall Ship Libertad in Ghana Over Debt Dispute

  1. The representation of a tall ship as it appears in this blogs has provided a new wind of fresh air in the matter. Thanks for posting about this, I would love to read more about this topic. Another good post Rick.

  2. Stuart McGeady says:

    Tough break for Libertad, her captain, crew and cadets. Enjoyed seeing Libertad on her occasional visits to Baltimore. Take exception to your comparison of financier Paul Singer with the Somali Pirates. The pirates of course are criminals who operate well outside the international law of the sea, whereas Singer holds a valid marker from the deadbeat government of Argentina. Arrest of a ship is a centuries old practice of creditors or plaintiffs to encourage cooperation from a reluctant debtor.

  3. Rick Spilman says:

    Singer has made his many millions from legal extortion. His vulture funds buy up sovereign debt for pennies on the dollar and then use the legal system to force settlements at face value plus interest. The ex-UK Prime Minister Gordon Brown has called the thuggish actions of the vultures funds “morally outrageous.” The World Bank says that the vulture funds are “a threat to debt relief efforts” and the even former, Bush-era US treasury secretary Henry Paulson said: “I deplore what the vulture funds are doing” in testimony before the House of Representatives’ financial committee in 2007.

    And, no the seizing of Naval vessels of sovereign nations by private debtors is not a “centuries old practice.” It is of questionable legality at best.