Argentina must pay $1.33 billion to long-defaulted hedge funds that held out on discounted offers during the country's debt restructuring, the 2nd Circuit ruled.
If Argentina maintains its payments to creditors who took a
discounted deal to get their money, then the country must also pay a group of
holdout bondholders seeking all of the $1.33 billion owed, the federal appeals
court in New York ruled.
However, the 2nd Circuit did not overturn a stay on enforcement
should the U.S. Supreme Court intervene and review the case. The high court
could hear the case when it returns in October.
An economic crisis in 2001 led Argentina to default on about $100
billion of sovereign debt. Most bondholders agreed to voluntary restructurings
in 2005 and 2010, but some did not. The holdouts sued in New York, because
Argentina had agreed to waive sovereign immunity in its bond indenture
agreements.
In order to enhance the bonds' marketability, the South American
country promised periodic interest payments and said the bonds would be
governed by New York law. The country also promised that, in the event of
default, unpaid interest and principal would become due in full.
It further promised that each bond would be payable to the
transferee, regardless of whether it was a university endowment, a so-called
"vulture fund," or a widow or an orphan.
But Argentina defaulted on the bonds, and then enacted legislation
specifically forbidding future payment on them and continued to pay interest on
subsequently issued debt.
In October 2012, the 2nd Circuit upheld injunctions issued by the
district court to remedy Argentina's breach of its obligations.
U.S. Judge Thomas Griesa directed that whenever Argentina pays on
the bonds or other obligations that it issued in the 2005 and 2010
restructurings, the country must also make a "ratable payment" to
those who hold defaulted bonds.
The 2nd Circuit remanded, however, for the district court to clarify
the injunctions' payment formula and effects on third parties and intermediary
banks.
The district court answered in November 2012 with those
clarifications, as well as an opinion explaining them. Argentina appealed.
The republic was invited to propose an alternative payment formula
for the outstanding bonds, but Argentina instead proposed an entirely new set
of substitute bonds.
"In sum, no productive proposals have been forthcoming,"
2nd Circuit Judge Barrington Parker wrote. The court noted that the nation's
lawyer told the court during oral arguments that Argentina "would not
voluntarily obey" the district court's injunctions, even if they were
upheld by this court.
"Moreover, Argentina's officials have publicly and repeatedly
announced their intention to defy any rulings of this court and the district
with which they disagree," Parker wrote.
Analysts have said the court's ruling buys Argentina more time on
their appeal efforts.
Aurelius Capital Management and Elliott Management Corp.'s NML unit
sued Argentina for full repayment of their defaulted bonds, and have chased the
country for repayment across the globe.
Holdouts have argued in U.S. courts that the equal-treatment
clauses in their defaulted bonds mean those securities should have the same
payment priority as new bonds issued in 2005 and 2010 - when the country
restructured its debt -- at heavily discounted rates.
Argentina has challenged certain aspects of the amended
injunctions, and appeals have also been followed from other entities: a group
of exchange bondholders calling themselves the Exchange Bondholder group; The
Bank of New York Mellon, which is the indenture trustee to Exchange
Bondholders; and Fintech Advisory Inc., a holder of Exchange Bonds.
But because their interests are not "cognizably
affected" and the third parties lack standing, their appeals were
dismissed.
"At the same time, their arguments are not lost because they
requested that, in the event they were not deemed appellants, the court
consider their arguments as coming from amici curiae," Parker wrote.
"Because Argentina contends in its own appeal that the amended injunctions
should be vacated because, among other reasons, they are inequitable to
exchange bondholders, we will consider the arguments of EBG, Fintech, Euro
Bondholders and ICE Canyon as arguments from amici curae in support of
Argentina."
Parker was also unmoved by Argentina's pleas.
"Argentina advances a litany of reasons as to why the amended
injunctions unjustly injure itself, the exchange bondholders, participants in
the exchange bond payment system, and the public," he wrote. "None of
the alleged injuries leads us to find an abuse of the district court's
discretion."
Argentina argued that the amended injunctions unjustly injured it
in two ways: that the injunctions violate the Foreign Sovereign Immunities Act
by forcing Argentina to use resources that the statute protects, and that the
injunctions' ratable payment remedy is inequitable because it calls for it to
bondholders to receive their full principal and all accrued interest when
exchange bondholders receive even a single installment of interest on their
bonds.
"However, the undisputed reason that plaintiffs are entitled
immediately to 100 percent of the principal and interest on their debt is that
the [fiscal agency agreement] guarantees acceleration of principal and interest
in the event of default," the court wrote.
The three-judge panel agreed with the district court's conclusion
that the amount owed to plaintiffs is the accelerated principal plus interest.
"We believe that it is equitable for one creditor to receive
what it bargained for, and is therefore entitled to, even if other creditors,
when receiving what they bargained for, do not receive the same thing,"
Parker wrote. "The reason is obvious: the first creditor is differently
situated from other creditors in terms of what is currently due to it under its
contract."
He said the district court's decision did nothing more "than
hold Argentina to its contractual obligation of equal treatment."
Global investors worry that if the holdout creditors prevail in
this case, future investors may resist other nations' debt-restructuring offers
in the hopes of a bigger payout.
The 2nd Circuit disagreed.
"This case is an exceptional one with little apparent bearing
on transactions that can be expected in the future," Parker wrote.
"Cases like this one are unlikely to occur in the future because Argentina
has been a uniquely recalcitrant debtor and because newer bonds almost
universally include collective-action clauses which permit a supermajority of
bondholders to impose a restructuring on potential holdouts."
fecha |
Título |
09/05/2023| |
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26/01/2023| |
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10/11/2021| |
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16/08/2020| |
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17/07/2020| |
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24/10/2013| |
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09/10/2013| |
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29/09/2013| |
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10/09/2013| |
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04/09/2013| |
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27/08/2013| |
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20/08/2013| |
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20/08/2013| |
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16/07/2013| |
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03/07/2013| |
|
11/06/2013| |
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05/06/2013| |
|
27/05/2013| |
|
02/05/2013| |
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05/04/2013| |
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27/03/2013| |
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21/03/2013| |
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13/03/2013| |
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13/03/2013| |
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20/02/2013| |
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04/02/2013| |
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18/01/2013| |
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13/01/2013| |
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07/01/2013| |
|
13/11/2012| |
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07/11/2012| |
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30/10/2012| |
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24/10/2012| |
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05/09/2012| |
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31/08/2012| |
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21/08/2012| |
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17/08/2012| |
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11/08/2012| |
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31/07/2012| |
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31/07/2012| |
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24/07/2012| |
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26/06/2012| |
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20/06/2012| |
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05/06/2012| |
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29/05/2012| |
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22/05/2012| |
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15/05/2012| |
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08/05/2012| |
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02/05/2012| |
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24/04/2012| |
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17/04/2012| |
|
10/04/2012| |
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10/04/2012| |
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27/03/2012| |
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20/03/2012| |
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20/03/2012| |
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13/03/2012| |
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13/03/2012| |
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06/03/2012| |
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06/03/2012| |
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28/02/2012| |
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28/02/2012| |
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28/02/2012| |
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28/02/2012| |
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28/02/2012| |
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28/02/2012| |
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21/02/2012| |
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21/02/2012| |
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21/02/2012| |
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19/10/2011| |
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04/10/2011| |
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20/09/2011| |
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13/09/2011| |
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07/09/2011| |
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07/09/2011| |
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30/08/2011| |
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30/08/2011| |
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16/08/2011| |
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09/08/2011| |
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03/08/2011| |
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13/07/2011| |
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13/07/2011| |
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21/06/2011| |
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21/06/2011| |
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14/06/2011| |
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14/06/2011| |
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08/06/2011| |
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08/06/2011| |
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31/05/2011| |
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31/05/2011| |
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24/05/2011| |
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24/05/2011| |
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19/05/2011| |
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19/05/2011| |
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10/05/2011| |
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10/05/2011| |
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26/04/2011| |
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26/04/2011| |
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12/04/2011| |
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07/04/2011| |
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28/03/2011| |
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20/03/2011| |
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17/03/2011| |
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15/03/2011| |
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09/03/2011| |
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09/03/2011| |
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01/03/2011| |
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22/02/2011| |
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15/02/2011| |
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09/02/2011| |
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26/01/2011| |
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12/01/2011| |
|
07/01/2011| |
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29/12/2010| |
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13/12/2010| |
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07/12/2010| |
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05/12/2010| |
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30/11/2010| |
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23/11/2010| |
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20/11/2010| |
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16/11/2010| |
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10/11/2010| |
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09/11/2010| |
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06/11/2010| |
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26/10/2010| |
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15/09/2010| |
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30/08/2010| |
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30/08/2010| |
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03/08/2010| |
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27/07/2010| |
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13/07/2010| |
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24/06/2010| |
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24/03/2010| |
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20/09/2009| |
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26/08/2009| |
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19/08/2009| |
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27/01/2009| |
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01/10/2008| |
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01/10/2008| |
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25/09/2008| |
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25/09/2008| |
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24/09/2008| |
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24/09/2008| |
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23/09/2008| |
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23/09/2008| |
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08/09/2008| |
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08/09/2008| |
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26/08/2008| |
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26/08/2008| |
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13/08/2008| |
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13/08/2008| |
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24/06/2008| |
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24/06/2008| |
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04/06/2008| |
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04/06/2008| |
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07/05/2008| |
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15/04/2008| |
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31/01/2008| |
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05/01/2008| |
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03/11/2007| |
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11/10/2007| |
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12/09/2007| |
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22/08/2007| |
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29/07/2007| |
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28/07/2007| |
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27/06/2007| |
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30/11/2006| |
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30/11/2006| |
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09/11/2006| |
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01/11/2006| |
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05/10/2006| |
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06/09/2006| |
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20/07/2006| |
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17/05/2006| |
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30/04/2006| |
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19/03/2006| |
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15/02/2006| |
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26/01/2006| |
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