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Plane is embargoed over a debt to Buenos Aires province
La Nacion
July 22, 2008

By Hugo Alconada Mon

Montoya announced the decision; the holdouts are analyzing actions

The Tax Authority of Buenos Aires province (ARBA) yesterday embargoed a plane from Aerolineas Argentinas, for a debt of 120 million pesos. This amount is owed by the company in taxes from gross revenues and the embargo was put in place by the office of the State Public Prosecutor. According to a release from the tax authority, the airline's directors were invited to adhere to a payment plan, which will expire on the 31st of this month.

According to the report, the plane in question has a capacity for 149 passengers and eight crew members, is insured for US$17 million and carries the tail number LV-VBX on the National Registry of Aircraft of the Air Force. The prosecutor had first taken the measure in a provisional way, but later confirmed the disposition in a definitive form and proceeded with the embargo of the plane.

Meanwhile, and just as the news arrived from Buenos Aires, the U.S. holders of sovereign debt that remains in cessation of payments are analyzing which possibilities exist to embargo a plane from Aerolineas Argentinas when the Congress approves its re-nationalization, according to what some legal representatives told LA NACION. One of those lawyers, Guillermo Gleizer, who last year led the legal offensive in the U.S. against Tango 01, believes however that it will be very difficult to move forward down that path. "First, the State still is not the owner of Aerolineas, since it must pass through Congress. Second, it's necessary to see if Aerolineas is the true owner of the planes or if it only leases them, as is common among the smaller airlines," he explained.

Gleizer also recalled that an embargo carries with it the deposit in exchange for a multi-million dollar guarantee to cover eventual damages to Aerol neas for the days that its plane is kept on the ground if soon after it ends up not belonging to them, plus the costs of maintaining the plane as it's parked during the course of the legal debate. "The idea of an embargo ends up being a weak one at this time, but perhaps it will change within two months," he explained. The unknown is if some debt holder will run the risk of heavy economic cost in turn for holding up a plane in the United States, Italy or Germany, countries in which there are lawsuits against the Argentine state.

The combativeness of the holdouts was in evidence at the end of March 2007, when Tango 01 had to fly to California for maintenance. If it had done so, it would have been embargoed by Italian bondholders Michele Colella and Dense Dussault, who want to collect some US$6.7 million in principal and interest that Argentina owes them. It generated a debate that ended months later, when the federal judge for the Northern District of California, William Alsup, determined that Tango 01 is "immune from execution in any federal court of the United States."