In the win column for Duane Morris lawyer: Argentine bond case

Skip Di Massa is a first-generation Italian American who grew up speaking Italian with his parents in their Abington Township home. He's put that heritage to good use.

Di Massa now is a top commercial litigator at Center City law firm Duane Morris, where he represents secured and unsecured lenders in bankruptcy proceedings in federal district court in Philadelphia and in New York and handles a fair amount of business from European clients.

On Wednesday, U.S. District Judge Thomas Griesa, ruling in Manhattan, handed Di Massa a big win, effectively signing off on a settlement requiring the government of Argentina to repay $150 million in defaulted bond payments to Di Massa's client, the bondholders.

His client was no mega-pension fund, nor was it a money-center bank. It was a group of Italian investors and pensioners who had been swept up in a multiyear litigation battle over Argentina's catastrophic 2001 default. Simply for wanting their money back, the Argentine government of former President Cristina Fernandez de Kirchner tried to cast them as vultures.

But nothing could have been further from the truth. Argentina, by not paying its debts, had turned itself into an international pariah, and for years effectively had been locked out of traditional credit markets. A new government took over in December and, desperate for an infusion of cash to aid the long-hobbled Argentine economy, hammered out a settlement, which Griesa signed off on last week.

"This probably has been the most important case in my career because I was dealing with real people," Di Massa said. "I deal a lot with corporations and big business. These were individuals who I would get on the phone with them and we would talk, and it was heart-wrenching."

The story begins with Argentina's $91 billion bond default. Frozen out of international credit markets, it slipped into an economic depression in which more than half its population fell below the poverty line. Lenders who could afford it or saw no other choice eventually settled, accepting 30 percent of the face value of their bonds. That accounted for about 93 percent of the outstanding debt.

But a handful of lenders, including investors and pensioners who were to become Di Massa's clients, said, "No way." The holdouts included several large hedge funds that had purchased already discounted Argentine debt for pennies on the dollar.

The hedge funds, represented by other lawyers, played hardball. One of them, NML Capital, in 2012 succeeded in persuading the government of Ghana to briefly seize an Argentine Navy training vessel, a three-mast tall ship, that had docked in the port city of Tema on a goodwill visit.

Di Massa, who worked on the case with fellow Duane Morris partner Gerard Catalanello, and his client were not part of that action. But they did take steps to try to seize de Kirchner's plane, known as Tango One, when she flew to Rome in 2013 to attend the pope's inauguration. When de Kirchner, no doubt guarding against the American lawyers' repo tactics, flew commercial, the plan was abandoned.

"These were ordinary citizens who as part of their retirement portfolios made these investments based on what they thought was the full faith and credit of Argentina; these people put their hard-earned money into an investment and just as a matter of principle this was a country that promised to pay them back," Di Massa said of his clients.

The Italians' hard luck didn't end with Argentina's default. The American law firm they engaged to represent them turned out to be that of convicted Ponzi scheme lawyer Marc Stuart Dreier. Known for his lavish lifestyle, Dreier was convicted of bilking investors out of hundreds of millions, forcing his Italian clients to look elsewhere.

They then began talks with another firm, Milberg Weiss, but that potential representation fell apart amid a federal investigation of four of the firm's partners, who were charged with making illegal payments to plaintiffs as an inducement to sue. A lawyer in Italy alerted Di Massa to the pensioners' plight, and he set about signing them up.

Di Massa drove from one town to another in Italy and France and also visited clients in Monte Carlo, explaining in fluent Italian how he and Duane Morris might be able to recoup their funds. His driver was an Italian octogenarian who served as the local bondholders' representative and insisted on driving the Italian highways at breakneck speeds, once crashing his flashy BMW into a tunnel.

"He told me he had the reflexes of an 18-year-old," Di Massa said, counting himself lucky that he survived.

Some of DiMassa's clients were well-heeled investors. Others lived on a shoestring, invested $10,000 or $20,000 in the Argentine bonds, virtually everything they had, and could not afford to walk away.

The turning point came when Di Massa's clients and the other holdouts, including the hedge funds, persuaded Griesa to block payments to earlier bondholders until they were paid. The move amounted to a checkmate, foreclosing any possibility of Argentina regaining access to credit.

Both sides announced a $4.7 billion settlement in March. By the end of summer, Di Massa's clients should get their money back. And the law firm, too, will finally be paid.

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