## Facts

- Panama incurred external debt under syndicated loan agreements, including a 1982 loan agreement.
- In 1995, Panama implemented a Brady Plan restructuring that included interim measures limiting recognition of assignments after an October 20, 1995 “Final Trading Date” and setting deadlines for settlement and creditor commitment letters.
- In late October 1995, Citibank and Swiss Bank Corporation assigned to Elliott roughly $12.24 million in principal of Panama’s 1982 debt for about $8 million; the banks retained other interests and participated in the restructuring.
- Assignment notices were dated after October 20 and reflected post–October 20 effective dates, but the restructuring agent later registered Elliott as a lender and, with Panama’s knowledge, paid Elliott over $900,000 in interest.
- Elliott declined to participate in the restructuring; Panama later stopped paying Elliott under the 1982 agreement.
- Elliott sued for breach of contract; Panama asserted defenses based on the restructuring’s interim measures, alleged binding effect of the banks’ commitment letters, New York champerty law, and counterclaimed for tortious interference.

## Issues

1. Whether the assignments to Elliott were valid under the 1982 loan agreement and the 1995 restructuring plan’s interim measures, including the October 20 “Final Trading Date.”
2. Whether the banks’ commitment letters under the restructuring plan invalidated the assignments or bound Elliott to participate in the restructuring.
3. Whether the assignments were void under N.Y. Judiciary Law § 489 (champerty) because Elliott allegedly purchased the debt primarily to sue.
4. Whether Elliott tortiously interfered with Panama’s contracts with the banks by inducing assignments allegedly contrary to the banks’ commitments.

## Decision

- The court granted Elliott summary judgment on its breach-of-contract claim and dismissed Panama’s tortious-interference counterclaim.
- The court held the assignments valid, finding the trades occurred before the Final Trading Date even if settlement and paperwork occurred later.
- The court held the banks’ commitment letters did not retroactively negate completed assignments and did not impose restructuring obligations on Elliott.
- The court rejected the champerty defense, concluding Panama failed to show Elliott’s primary purpose in purchasing the debt was to bring suit.
- The court held the tortious-interference counterclaim failed for lack of evidence of wrongful means or improper motive and because the transactions were lawful secondary-market debt purchases.

## Legal Principles

- In syndicated loan markets, a trade may be binding on the trade date even if settlement and registration occur later; plan provisions restricting post-cutoff trading are not necessarily violated by later settlement of pre-cutoff trades.
- A debtor’s separate agreements with assignor-lenders (such as restructuring commitment letters) do not automatically extinguish or limit an assignee’s rights under the underlying debt instrument; any breach of those commitments is ordinarily addressed against the assignors.
- Under N.Y. Judiciary Law § 489, a purchase of a claim is champertous only when the primary purpose is to bring a lawsuit; acquiring distressed debt as a bona fide investment, even with contemplated enforcement, is not barred.
- Tortious interference with contract under New York law requires intentional procurement of a breach through wrongful means or improper motive; ordinary arms-length market transactions for value, without wrongful conduct, do not suffice.

## Conclusion

The court enforced Elliott’s rights as assignee under Panama’s 1982 loan agreement, holding that the assignments were valid despite restructuring deadlines, that the banks’ restructuring commitments did not bind Elliott, that the purchases were not champertous, and that Panama’s tortious-interference counterclaim failed as a matter of law.


Elliott Assocs., L.P. v. Republic of Panama, 975 F. Supp. 332 (S.D.N.Y. 1997)