Full opinion text
OPINION SWEET, District Judge. Elliott Associates, L.P. (“Elliott”) brought these actions to recover monies due and owing on foreign debt instruments it acquired by way of assignment in the secondary capital markets. Defendants The Republic of Peru (“Peru”) and Banco de la Nacion (“Banco”) (collectively, the “Peru Defendants”) concede the validity of the debt but deny that Elliott is a valid holder. They contend that the assignments, by two third-party banks, are void because Elliott committed “cham-perty” in purchasing the debt in violation of Section 489 of the New York Judiciary Law. Banco additionally contends that it cannot be liable on the debt assigned to Elliott, even if the assignments are valid, due to an internal 1994 Peruvian law which purported to transfer Banco’s foreign debt obligations to Peru, thus allegedly relieving Banco of any liability. Upon the trial before the Court and all the prior proceedings and the findings of fact and conclusions of law which follow, judgment will be entered in favor of the Peru Defendants. Parties Elliott is a Delaware limited partnership authorized to do business in the State of New York with its principal place of business in New York, New York. Banco is a foreign financial institution organized under the laws of Peru with its principal place of business in Lima, Peru. Peru is a foreign state as defined in 28 U.S.C. § 1603(a). Prior Proceedings The prior proceedings in this controversy are set forth in the previous opinions of this Court, familiarity with which is assumed. See Elliott Assocs., L.P. v. Republic of Peru, 176 F.R.D. 93 (S.D.N.Y.1997); Elliott Associates, L.P. v. Republic of Peru, 96 Civ. 7916, 1997 WL 436493 (S.D.N.Y. Aug. 1, 1997); Elliott Assocs., L.P. v. Republic of Peru, 961 F.Supp. 83 (S.D.N.Y.1997); Elliott Assocs., L.P. v. Republic of Peru, 948 F.Supp. 1203 (S.D.N.Y.1996). Elliott commenced these actions on October 18, 1996 in the Supreme Court of the State of New York, County of New York, seeking money judgments based upon allegations of Banco’s default under certain written loan agreements and Peru’s default under a written guaranty securing certain loan agreements. Peru and Banco removed these actions to this Court on October 21, 1996. The Court denied Elliott’s motion for an order of attachment on December 12, 1996 and for summary judgment on April 28, 1997. Some fourteen Orders and Opinions were entered relating to discovery and scheduling. A bench trial was held beginning on March 19, 1998, and ending on March 25, 1998. Post-trial submissions were received, and closing arguments were heard on May 26, 1998, at which time the action was considered fully submitted. Findings of Fact I. Elliott’s Purchase of Peruvian Debt Elliott purchased, in a series of five trades from January 31, 1996, to March 1, 1996, all right, title and interest, from Swiss Bank Corporation (“SBC”) and ING Bank, N.V. (“ING”), $20,682,699.04 in principal amount, together with all accrued and unpaid interest, of the working capital obligations of Banco de la Nacion and Banco Popular del Peru under certain letter agreements (the “Letter Agreements”). The Letter Agreements were guaranteed by Peru in a written Guaranty on May 31, 1983 (the “Guaranty”). Elliott paid SBC and ING a combined total of $11,431,202.08. The trades were as follows: (1) On January 31, 1996, $5,000,000 in principal amount was traded for $2,589,500.00 by SBC; (2) on February 6, 1996, $2,000,000 in principal amount was traded for $1,090,000 by ING; (3) on February 14,1996, $5,000,000 in principal amount was traded for $3,250,000 by SBC; (4) on February 14,1996, $5,000,000 in principal amount was traded for $2,589,500 by SBC; and (5) on March 1, 1996, $3,682,-679.55 in principal amount was traded for $1,907,259.83 by SBC. Elliott closed its assignment agreement with ING on March 29, 1996, and provided a fully executed copy of the agreement to ING until April 15, 1996. Elliott closed its SBC purchases on April 19, 1996, and provided a fully executed copy of the assignment agreement to SBC on May 1,1996. The Letter Agreements and the Guaranty, both of which are governed by New York law, are valid outstanding obligations of Ban-co and Peru. The Letter Agreements and the Guaranty entitle the holder to, among other things, repayment of all principal, plus interest as provided in the Letter Agreements. The Letter Agreements and the Guaranty also entitle the holder to recover attorneys’ fees, costs and disbursements incurred to enforce the Letter Agreements and the Guaranty. Of the total $20,682,699.04 in principal obligations Elliott acquired, Banco is the Obligor of $7,000,000 in principal. Banco Popular is the Obligor for the remaining $13,682,699.04 in principal. Peru, however, guaranteed to repay the entire amount. Banco and Peru have not paid any of the outstanding amounts due and owing under the Letter Agreements or the Guaranty. Banco and Peru are therefore in default of their obligations under those instruments. II. Elliott’s Intent And Purpose In Purchasing The Peruvian Debt Was To Bring An Action Elliott purchased the Peruvian debt with the intent and purpose to sue. This purpose and intent can be determined from Elliott’s investment strategy, the resumes of the individuals assembled for the Peruvian debt project, Elliott’s delay in closing the Peruvian debt trades until after litigation risks were clarified by the Second Circuit in the Pravin Banker matter, the absence of credibility to Elliott’s alternatives, and Elliott’s conduct subsequent to the purchases. A. Elliott’s Emerging Market Debt Ad-visors Were Experienced In Purchasing Sovereign Debt And Suing Upon It Elliott set up an investment team for the purchase of emerging market debt, consisting principally of Jay Newman (“Newman”), Andrew Kurtz (“Kurtz”), a senior analyst and portfolio manager at Elliott, Paul Singer (“Singer”), Elliott’s founder and chief executive, and Ralph Dellacamera (“Dellacamera”), Elliott’s head trader. Additionally, the team retained Michael Straus as outside counsel. Prior to its first meeting with Newman, Elliott had never invested in emerging market debt. Elliott is an investment fund which, at the time the sovereign debt team was assembled, specialized in the purchase of distressed assets which it believed the market had undervalued. These included debtor-companies in bankruptcy, companies recently emergent from bankruptcy, or companies which had yet to enter formal bankruptcy. Singer, Kurtz and Dellacamera had no experience in emerging market debt. Elliott therefore relied on Newman’s expertise and recommendations in purchasing emerging market debt. Jay Newman, who had formerly practiced law, entered the sovereign debt investment area in 1983 during the Latin American debt crisis when he began working for Lehman Brothers. In 1987 or 1988, Newman became Lehman Brothers’ managing director for Third World debt, responsible for developing Lehman Brothers’ trading and investment business in that area. In 1989, Newman joined Dillon Reed, where he continued trading and brokering emerging market debt and managed a third world debt investment fund. One year later, he moved to Morgan Stanley, again to work on emerging market debt investments. In 1993, Newman left Morgan Stanley to establish The Percheron Fund, an offshore investment fund that focused on emerging market debt. Newman managed the Percheron Fund until 1995. Also in 1993, Newman solicited investors for Water Street Bank & Trust Limited (‘Water Street”), another offshore fund that invested in emerging market debt. At approximately the same time, Newman introduced Water Street’s investors to Michael Straus, who he had first met in 1992 or 1993, when Straus was representing Banque de Gestión Privee-SIB in its sovereign debt lawsuit against the Republic of Paraguay. Newman knew of Straus because of his work as trial counsel to clients involved in sovereign debt lawsuits, as Straus has been involved in at least thirteen other debt lawsuits against sovereigns in the United States. Straus assisted Newman in the solicitation of investors for Water Street and later became trial counsel to Water Street for its sovereign debt lawsuits. Newman and Straus advised Water Street on its purchases of the sovereign debt of Poland, Ecuador, Ivory Coast, Panama, and Congo. Water Street thereafter filed lawsuits against each of those sovereigns seeking full payment of the debt purchased by Water Street. Straus served as trial counsel to Water Street for each of those lawsuits. Neither Newman nor Straus, however, made the ultimate decisions for Water Street regarding whether to purchase emerging market debt, or whether to sue the sovereign governments to collect. In May 1995, the Water Street investors decided to liquidate the fund, and Newman “assist[ed] extensively in [the] liquidation of Water Street.” Straus had become familiar with the elements of champerty. Allegations of champerty were charged against Straus’ clients in Banque de Gestion Privee-Sib v. La Republica de Paraguay, 787 F.Supp. 53 (S.D.N.Y. 1992); Water St. Bank & Trust Ltd. v. Republic of Congo, 94 Civ. 1894(SS) (S.D.N.Y.); and Water St. Bank & Trust Ltd. v. Republic of Poland, 95 Civ. 0042(LAP) (S.D.N.Y.). In addition, Straus was familiar with CIBC Bank and Trust Company (Cayman) Ltd. v. Banco Central Do Brasil, 886 F.Supp. 1105 (S.D.N.Y.1995), where the defendant raised champerty. B. Elliott’s Emerging Market Debt Investments During the winding down of Water Street and Percheron, Newman “wanted to stay involved in the business of third world debt.” Therefore, when he approached Elliott in August or September 1995, Newman “was looking basically for a relationship with an investment fund so that (he) could continue working in the area.” By October 1995, Newman was retained as an advisor to Elliott and began to make recommendations on the purchase of emerging market debt in the secondary market. According to Straus, in December 1995, Newman introduced him to Elliott for the purpose of retaining him for emerging market debt matters. Straus was retained by Elliott as counsel of record in this case and in Elliott’s sovereign debt lawsuit against the Republic of Panama. 1. The Panamanian Debt Purchases Newman first recommended that Elliott purchase the sovereign debt of the Republic of Panama, the same debt on which Water Street had brought suit. At the time of Elliott’s purchase of Panamanian debt, Panama was in the process of finalizing its debt restructuring. Newman and Singer were aware that Panama had announced the terms of its restructuring, and Newman advised Elliott as to the status of Panama’s restructuring negotiations. Elliott purchased $28,750,907.05 face value of Panamanian debt obligations for $17,579,-685.56 through trades with SBC, ING, First National Bank of Chicago, and Citibank, NK, and Newman negotiated the assignment agreements. Elliott declined to participate in Panama’s restructuring, and in July 1996, brought suit against Panama seeking full payment on the debt it had purchased. Straus was trial counsel for Elliott in that lawsuit. 2. The Peruvian Debt Purchases Newman next recommended that Elliott purchase Peruvian sovereign debt. According to Singer, Newman was “instrumental in recommending” Peruvian debt to Elliott, “and that’s why we bought the debt.” Like Panama, Peru was in the process of finalizing its restructuring when Elliott purchased its debt. In March 1983, Peru determined that it had insufficient foreign exchange reserves to service its foreign debt, and entered negotiations with the Bank Advisory Committee for Peru (“BAC”), a committee consisting of representatives of Peru’s major commercial creditors. The negotiations yielded a series of refinancing agreements, including letter agreements dated March 7, 1983, and May 31, 1983 (collectively the “1983 Letter Agreements”), between Peruvian banks and state-owned companies and their foreign creditors, and guaranteed by the Government of Peru. After further negotiations stalled in 1984, Peru imposed restrictions on payment of external debt. As a result, Peru fell into arrears on its debts to various multinational organizations, foreign nations, and foreign commercial lenders. On March 10, 1989, United States Treasury Secretary Nicholas Brady revised United States policy on international debt. The new policy, known as the “Brady Plan,” urged lenders, on a voluntary basis, to forgive some of the debt owed to them by less developed countries, restructure what debt remained outstanding, and continue to provide these countries with additional loans. Beginning in March 1990, Peru’s commercial lenders filed various lawsuits in five countries. On October 25,1990, Peru signed an agreement with the BAC to stay the pending lawsuits in order to enter into negotiations to restructure Peru’s sovereign debt. About one year later, in September 1991, Peru and the IMF entered into an agreement to restructure the Peruvian economy. In 1993, Peru’s sovereign debt was approximately $25 billion, which was owed to multinational institutions such as the IMF, the World Bank, and the Inter-American Development Bank; other countries; commercial banks; and suppliers. In December 1994, all of the creditors who had sued Peru, with the exception of Pravin Banker Associates Ltd. (“Pravin Banker”), dismissed their lawsuits in consideration for Peru’s November 1992 Tolling Declaration. On October 27, 1995, Peru and the BAC publicly announced an agreement in principle for a debt restructuring plan designed in accordance with the Brady Plan. The agreement covered $4.4 billion face amount of debt, virtually all of the external commercial debt owed by Peru and Peruvian public and private-sector debtors, including the debt involved in these lawsuits. It was only after the agreement in principle was reached, in January 1996, that Elliott began to accumulate the debt at issue in this action. The Term Sheet for Peru’s restructuring was negotiated between January and June 1996 and was issued on June 5,1996. Creditors were required to present commitments to participate in the restructuring by July 31, 1996. Of the approximately 180 creditors eligible to take part in Peru’s restructuring, only Elliott and Pravin Banker refused to participate. On November 8, 1996, Peru and its creditors executed an Exchange Agreement im- • plementing Peru’s restructuring (“Brady Agreement”), which closed on March 7,1997. 3. Elliott Intended To Bring An Action a. From its inception in October 1995, Elliott’s sovereign debt strategg focused on filing lawsuits As concisely put by Elliott’s president, Paul Singer: “Peru would either ... pay us in full or be sued.” Under the circumstances as they existed in January 1996, when Elliott began its assembly of Peruvian debt, the only credible way that Elliott could achieve its goal of full payment was by bringing an action. Singer, Elliott’s president, admitted that demanding full payment and suing Peru was one of Elliott’s investment strategies at the time it purchased Peruvian debt, although he claimed this alternative was, a last resort because of the typically poor investment return achieved through litigation, thus contradicting both Newman and Kurtz’ testimony that filing suit or seeking full payment was not considered as a strategy. b. Newman and Straus have a long history of suing sovereigns Newman, upon whom Elliott relied in deciding to invest in the Peruvian debt, and Straus, with whom Elliott met in December 1995, before they began investing in the debt, are both experienced with the investment strategy of purchasing emerging market debt and suing thereon. Their involvement with Elliott is highly probative of Elliott’s intent in purchasing the debt. During Newman and Straus’ association with Water Street, Water Street filed at least six debt lawsuits in this Court against sovereigns. Straus also advised Water Street on its purchases of Ecuadorian, Panamanian, and Polish sovereign debt, and Water Street later filed lawsuits against each of those countries in London. In addition to being counsel of record to Elliott in this case, Straus has been involved as counsel in at least six other sovereign debt lawsuits against emerging market countries. In December 1997, Straus’ company, Red Mountain Finance, brought suit against the Congo after purchasing that country's discounted sovereign debt on the secondary market. c. Elliott delayed closing its purchases of Peruvian debt until the Second Circuit had clarified the litigation risks Elliott intentionally delayed the closing of the assignments until after April 12, 1996, when the Second Circuit denied Peru’s request for an order to stay enforcement of a judgment without requiring the defendants to post a bond for the amount of the judgment, thereby clarifying Elliott’s litigation risks. See Pravin Banker Associates Ltd. v. Banco Popular Del Peru, Order No. 96-7183 (2d Cir. Apr. 12, 1996). 1. The Elliott-SBC Assignment Agreement The Elliott-SBC assignment agreement, covering four trades — January 31, February 13 (two separate trades), and March 1, 1996 — is dated April 19, 1996. Ricardo Leiva, the SBC employee responsible for closing these trades, testified that he expected that the trade would close within the industry — standard 21 calendar or 15 business days. Leiva testified that SBC’s normal practice was to complete assignments within 15 business days even when subsequent trades occurred with the same counterparty during that 15 day period. The new trades would normally be added to the transaction and all purchases would close within 15 business days. Elliott, however, rejected the Emerging Markets Traders Association (“EMTA”) standard assignment agreement, and instead requested that SBC use the same assignment agreement used for Elliott’s earlier purchase of Panamanian debt from SBC. Leiva revised the earlier agreement to incorporate the terms of the Peruvian transaction and, on February 7, 1996, forwarded it to Elliott for execution. Although Elliott had previously approved and executed the form of the assignment agreement in connection with its purchase of Panamanian debt, Elliott responded to SBC’s draft on February 21, 1996 by requesting numerous changes and seeking additional documentation. Leiva testified that he was surprised at the level of changes to the assignment agreement proposed by Elliott. On March 21, 1996, almost two months after its first trade with Elliott, SBC received additional revisions to the assignment agreement from Elliott, in which Elliott requested from SBC (a) a representation that the debt being purchased was still outstanding, (b) a representation that the Tolling Agreement and Guaranty were still in force, and (c) copies of the underlying loan agreements. Elliott’s lawyer informed SBC on March 21, 1996 that Elliott would not agree to a provision in the purchase of Peruvian debt requiring Elliott’s consent to Peru’s January 1994 privatization program, and sent additional changes to the assignment agreement on March 22,1996. On April 4, 1996, SBC sent Elliott a document labeled “final draft of assignment agreement,” and enclosed copies of original letter agreements with Chase and Crocker Banks, some of the documentation demanded by Elliott. On April 12, 1996, Mr. Leiva reported to Sarah Fels of the SBC legal department that a number of substantial issues were still outstanding in connection with the Elliott transaction. ING Bank received hard copies of the assignment agreement executed by an authorized representative of Elliott, Singer, on April 15, 1996, three days after the Second Circuit’s decision in Pravin Banker, and approximately two and a half months after the trade date. Shortly thereafter, on April 19, 1996, Elliott’s purchase of Peruvian debt from SBC closed, although Newman did not forward to SBC executed hard copies of the assignment agreement for the Peru debt until May 1, 1996. The SBC trades closed two months and nineteen days after the date of the first trade. Considering the standard practice of closing within 15 business days of a second trade, the assignments customarily would have closed by March 22,1996. Rather, they closed approximately four weeks later. Leiva estimated that the Elliott-SBC trade took longer to close than any of the approximately 300 sovereign debt trades he has been involved with during his three and a half years as a closer at SBC. Leiva also testified that he has never experienced the same level of problems in the sale of working capital debt as he encountered on the Elliott-SBC transaction. 2. The ING Assignment Agreement On February 9,1996, ING sent to Elliott a proposed assignment agreement, which was based on the assignment agreement previously executed by Elliott' for its purchase of Panamanian debt from ING. Because that agreement had been acceptable to Elliott for its purchase of Panamanian debt, ING’s closer for the transaction, Margaret Forehand, testified that she anticipated that it would be acceptable for Elliott’s purchase of Peruvian debt. Elliott responded to ING’s draft assignment agreement on February 21, 1996, by sending to ING comments and changes to the proposed agreement. Before calling Newman and being told that Elliott’s comments had been sent, Forehand had heard nothing for a week after forwarding the draft assignment agreement. On March 1, 1996, Forehand forwarded a revised version of the ING assignment agreement incorporating Elliott’s changes with a few slight modifications, which she expected that the transaction would be finalized at that time. Elliott responded to ING’s March 1, 1996, facsimile by requesting additional changes and insisting that ING provide the last date on which interest had been paid on the debt. Forehand testified that it was not customary in the market for a purchaser to require a last payment date. ING’s legal department drafted a letter sent to Elliott stating that the transaction had to close by a specific date or the deal would be canceled. In addition, the letter stated that Elliott had “unreasonably delayed settlement of the transaction and asked for certain provisions relating to the assignment of the assets that are not reflective of customary market practice and to which we cannot agree or comply.” After being confronted with ING’s ultimatum, Newman telephoned Forehand and said Elliott would close the ING transaction on March 29,1996. On March 28, 1996, Newman sent by facsimile executed signature pages of the assignment agreement to ING. They were signed by Dellacamera, purportedly on behalf of Elliott. However, Dellacamera was not authorized to bind Elliott to the ING assignment agreement. In general, he had no authority to sign contracts on behalf of Elliott. Dellacamera was only authorized if Singer had executed a specific written authorization. No written authorization was executed for Dellacamera with respect to the ING agreement. Elliott admitted that it sent the signed agreement only after being threatened by ING with cancellation of the transaction. The following day, March 29, 1996, Elliott wired ING its payment. Forehand testified she knew of no reason why the transaction with Elliott could not have closed within the standard 21 calendar day period. In fact, because Elliott failed to close promptly, ING imposed financial penalties on Elliott. Forehand testified that she has handled hundreds of sovereign debt transactions for ING, and that the level of changes to the ING agreement requested by Elliott was not customary. 3. Elliott Failed To Explain Any Alternative Reason For The Delays Even though Newman was responsible for negotiating the assignment agreement with SBC on behalf of Elliott, he testified at his deposition that he did not know why the transaction took from January 31, 1996 to April 19, 1996 to close. At trial, however, Newman proffered a list of purported reasons for the delay. First, Newman blamed SBC, claiming there was “a lot of back and forth ... over their representation” as to the amount of accrued interest, a “language problem” between Elliott’s attorney and the SBC closer, and a failure by SBC to supply underlying documentation of the debt. Newman also cited the concern of Elliott’s attorney, Larry Hui, about “dotting every ‘i’ and crossing every ‘t’ because these were direct loans” rather than syndicated loans. Newman asserted that Elliott’s practice was to be “obsessive” about the “necessity and accuracy of documentation in connection with purchases involving its investments.” He further claimed that “[t]he policy of the house is to be very, very careful and thorough,” and that Elliott’s lawyers were “under those instructions” in connection with the SBC and ING purchases. Finally, Newman claimed the closing delay occurred because Elliott had made “six or eight different purchases” and wanted to “wrap all these up into a single document” rather than enter into “six or eight different assignment agreements.” Elliott made five trades for the Peruvian debt, the last of which was concluded on March 1, 1996. The complexity of the assignments for working capital debt does not explain why the agreements did not close until six weeks later on April 15, 1996. The timing of the closings to occur after the Second Circuit’s April 12, 1996, denial of Peru’s stay application is more than mere coincidence, and evinces a deliberate strategy to maintain the option of unwinding the trades if the litigation risks seemed too great. B. Elliott Did Not seriously consider Alternatives To Brinying An Action Elliott at trial advanced various alternatives to bringing an action in an effort to recharacterize its intent at the time Elliott decided to purchase the Peruvian debt. They included: (1) holding and reselling the debt. (2) participating in Peru’s privatization program; (3) participating in Peru’s restructuring, including negotiating to improve the terms of the restructuring for all of Peru’s creditors; and (4) negotiating separately with Peru to obtain a better deal than the Brady terms. The evidence adduced at trial, however, clearly and convincingly demonstrated that none of these alternatives was realistically considered by Elliott when it purchased Peruvian debt. From the start, Elliott intended to sue and the testimony to the contrary was not credible. 1. Elliott Did Not Plan to Hold And Resell Peruvian Debt Newman, Kurtz, and Singer all testified that one of Elliott’s investment strategies was to hold and resell its Peruvian debt. Singer claimed that this strategy was Elliott’s “first resort.” The evidence presented at trial, however, demonstrates that Elliott never intended to resell its Peruvian debt. Singer admitted that Elliott never attempted to resell the Peruvian debt it purchased from SBC and ING. Although before Elliott brought this action SBC offered to repurchase the debt from Elliott at a “mutually acceptable price,” Elliott rejected SBC’s proposal without discussing a price. Singer stated bluntly that reselling the debt to SBC “wasn’t an option, and I didn’t even know at that time what a mutually acceptable price was.” SBC repeated its offer twice, and each time Elliott refused to resell the debt. Similarly, on May 30, 1996, ING offered to assign Elliott’s interest in the debt purchased from it to a purchaser of Elliott’s choice so that Elliott would obtain the economic benefit of its purchase of Peruvian debt. On May 31, 1996, Newman rejected ING’s offer. Newman admitted that Elliott never even investigated potential purchasers. Indeed, Elliott’s only offer to sell its Peru debt (at the full amount of principal and interest) was in November 1996, after Elliott had filed suit against Peru. 2. Elliott Did Not Plan To Invest In Peru’s Privatization Program, Another of Elliott’s claimed “investment strategies” was to participate in Peru’s privatization program. However, Elliott could not have achieved its full payment goal thereby, and was unfamiliar with the privatization program. Elliott’s primary goal in investing in Peruvian debt was to be paid in full: “Peru would either ... pay us in full or be sued.” Under Peru’s privatization program, however, only the principal amount of contributed debt was valued and a potential buyer was required to relinquish its claim to receive interest on that principal amount. Accordingly, full payment, including interest, was not possible through participation in a privatization. Moreover, Elliott’s testimony that Peru would negotiate a private debt-for-equity swap was not credible and misinformed. Newman testified that “if you had interest in buying Peruvian companies, you could approach Peru to talk about the purchase price on a negotiated basis, and negotiate also how you would pay. And part of the payment could be in terms of debt.” Newman claimed that privatization projects were undertaken “mostly on a negotiated basis” rather than by competitive bid because Peru had “guidelines and ranges” that allowed it flexibility in valuing debt contributed to a privatization. However, Newman could not identify a single instance in which Peru negotiated with a creditor over the value of debt contributed in a privatization transaction. Furthermore, Newman could not explain how the bidding process worked. Nor did he know that all privatized properties were sold by open bid. Indeed, Newman admitted that he never researched the procedures used by Peru in implementing its privatization program. Dr. Jorge Peschiera (“Peschiera”), Peru’s Chief Debt Negotiator from 1993 to 1997, credibly described the privatization process. To implement the privatization program, the Peruvian government established a ministerial committee to oversee privatization and to determine which companies to privatize. Thereafter, a special committee was established for each company that would be privatized. The special committee solicited bids to choose an investment bank to act as an advisor to the special committee. The terms of the bidding were publicly known and the bids were opened publicly. The majority of the successful bidders were large international institutions. Following the selection of an investment bank, the special committee and the investment bank would determine the best way to proceed and a privatization plan would be prepared. Included in the plan were the criteria for submitting bids— for example, minimum capital requirements, commitment to build infrastructure, experience in the relevant industry. These criteria were established in advance of soliciting any bids and were publicly announced. Accordingly, contrary to Newman’s unsupported claim that Peru would negotiate separately with creditors as concerned privatization projects, Peschiera testified that Peru publicly solicited bids from eligible bidders, opened the bids publicly, and selected the best bid. Peschiera testified that there were no private negotiations between Peru and potential buyers over either the participation criteria or with successful bidders. 3. Elliott Did Not Intend To Participate In Peru’s Brady Plan Newman, Kurtz, and Singer contended that participation in Peru’s restructuring was one of Elliott’s investment strategies. However, Elliott knew the terms of Peru’s restructuring before it purchased Peruvian debt, and Elliott rejected opportunities to participate in Peru’s restructuring. Elliott was aware at the time it purchased the Peruvian debt that Peru had announced the terms of its restructuring agreement. Both Singer and Newman testified that Elliott had calculated the “sizable discount” from face value being offered by Peru under the terms of its restructuring. At his deposition, Singer testified that this calculation had been made “[a]s soon as [Elliott] learned of the possibility of purchasing Peruvian debt” and the Brady terms. Elliott was also aware of the Peru bank advisory committee negotiations prior to Elliott’s purchase of Peruvian debt. Even before purchasing Peruvian debt, Elliott had concluded that it was going to claim that the terms of Peru’s restructuring undervalued Peruvian debt. Newman testified that he “was skeptical of the terms of the Brady.” Indeed, Elliott rejected each and every opportunity to participate in Peru’s restructuring. Newman conceded that Elliott was given the opportunity to submit a commitment to Peru’s restructuring but refused to do so, and Singer admitted that Elliott never even attempted to participate in Peru’s restructuring. 4. Elliott Did Not Plan To Negotiate Separately With Peru Finally, Elliott witnesses claimed that another investment strategy was to negotiate separately with Peru outside Peru’s negotiations with the BAC. The purported basis for Elliott’s conclusion that this strategy was viable, however, lacks credibility. a. Elliott knew Peru’s incentives to not engage in separate negotiations Because of the BAC’s insistence that all creditors be treated equally, Peru publicly announced that it would negotiate the terms of its debt restructuring only with the BAC and that it would not conduct separate negotiations with individual creditors. As part of Elliott’s due diligence in purchasing Peruvian debt, Kurtz read the Pravin Banker decisions, including the Court’s August 24, 1995 decision. In that decision, the Court commented that “Defendants note that Peru has committed to the Bank Advisory Committee not to give creditors who filed suit an advantage over creditors abiding by the Tolling Declaration.” At trial Newman admitted that he knew that countries in the process of negotiating restructurings of their sovereign debt with bank advisory committees resist separate negotiations with individual creditors. As relates specifically to Peru, Newman testified at trial that he was aware before Elliott’s purchase of Peruvian debt that Peru had resisted separate negotiations with creditors in connection with the Pravin Banker and Banco Cafetero lawsuits. b. Elliott’s claim that Peru would negotiate separately is unsupported As grounds for his claim that Elliott believed that Peru would negotiate separately with Elliott, Newman asserted that “Peru is probably the most opportunistic debtor ... of all the sovereigns I have seen.” As support for this allegation, Newman cited several points: (1) the conduct of the Garcia administration; (2) the fact that Peru stopped paying interest on working capital loans at different times; (3) the Banco de la Nación buyback program; (3) Peru’s privatization program; (4) Peru’s settlement of a claim brought by AIG; and (5) alleged side deals made by Peru. In sum, Elliott contended that Peru’s “opportunistic” conduct led Elliott to believe that Peru would engage in separate negotiations. 1) Different Default Dates For Different Creditors Newman asserted that Peru’s opportunistic character could be discerned from the observation that when Peru began defaulting on working capital debt in 1988, it did not default on all working capital loans at the same time. Instead, he asserted, Peru defaulted on the debt selectively over a five year period from 1988 through 1992. Peschiera testified, however, that the default dates for working capital debt were not based on seléctive treatment of creditors. Instead, the dates were determined by when the private borrowers who were the ultimate recipients of the monies stopped making payments to the Peruvian state-owned banks who had borrowed and re-lent the funds. Because the private borrowers began having financial difficulties and went into bankruptcy at different times, the corresponding default dates also varied. In addition, Peschiera explained that the state banks themselves, such as Banco Popular, went into bankruptcy at different times. 2) The Buyback Program Newman also pointed to Banco’s buyback program as evidence that Peru treated creditors differently, and therefore their hope for a separate negotiated settlement with Peru was realistic. Evidence adduced at trial established that beginning in approximately July 1994, and continuing until around the time Peru concluded its Brady negotiations, Banco set up a program to purchase Peruvian sovereign debt on the secondary market (the “Buyback Program”). The Buyback Program was undertaken under the authority of Banco, although members of the Peruvian government were advised of and approved the program. To execute purchases, Banco issued guidelines to SBC as to the type and amount of debt to purchase and the maximum purchase price. Upon receiving Banco’s instructions, SBC solicited sellers in the secondary market within the confines of those instructions. Any holder of Peruvian debt could sell that debt to SBC within the confines of Banco’s instructions. Peschiera testified that Banco never gave instructions regarding from whom SBC should purchase Peruvian debt and, to his knowledge, SBC never distinguished among sellers. Peru bought back at a substantial discount $1,735 billion in face value of principal, which was approximately 41% of the total $4.2 billion in face value then outstanding. The total value of the debt Peru repurchased, in principal amount plus accrued interest, was $8.5 billion. The Buyback Program was conducted confidentially, and thus it did not identify itself to any of the sellers. Although the Buyback Program may establish that Peru was able to exploit favorable market conditions to repurchase its own debt at a discount from the face value, it provides no evidence of the type of individual treatment Elliott contends it sought. 3) Privatization Program Newman also cited Peru’s privatization program as an example of Peru’s disparate treatment of creditors, claiming that serious investors could “propose the type of debt they would use and the price at which it was redeemed.” Newman asserted that starting in 1993, “Peru negotiated separately with many, many, many holders of Peruvian debt, particularly holders of working capital, to basically implement debt equity conversions, pursuant to which the debt was converted into equity investments in Peruvian companies.” However, Newman admitted that he never investigated the terms and procedures for participating in Peru’s privatization program. Newman did not know, for example, that under the program all of the properties were sold by open bid. Peschiera testified that both the terms of the bidding process and the results were publicly announced. Peschi-era testified that, to his knowledge, there were no separate negotiations between Peru and potential purchasers. Newman also did not known that Peruvian law provided a formula as to how debt would be valued when offered under the privatization program. Peschiera testified that Peru enacted legislation in 1993 that specified how debt could be used in the privatization process “to try to give everybody a chance, the same chance.” 4) American International Group Negotiation Newman further testified that “friends of mine at AIG ... said that they had success in direct negotiations with Peru because AIG was owed money by Peru.” Peschiera explained, however, that the AIG agreement with Peru resolved a claim arising from the Garcia Government’s expropriation of an oil company, having nothing to do with sovereign debt. 5) Side Deals In a further attempt to support Elliott’s claim that separate negotiations with Peru was a viable option, Singer asserted that Elliott knew of numerous “side deals” in which Peru had favored one creditor over another. Under questioning from the Court, however, Singer was unable to identify a single instance in which Peru negotiated separately with any creditor. THE COURT: [C]an you tell me when you first learned of any of what you characterized as opportunistic transactions, and can you identify any such? SINGER: I can’t identify any such, and I believe — well, in the sense that not paying one class of debt and ceasing to pay— THE COURT: That I understand. SINGER: Right. THE COURT: That’s a matter of record, one presumes. But this business of the privatization and private deal and so on, you don’t know of any specific one— SINGER: No. THE COURT: — nor at this point can you tell me when you first heard that, can you? SINGER: That’s correct. C. Elliott’s Negotiations With Peru After Its Purchases Were A Pretext Elliott adduced evidence at the trial that it wrote several demand letters to Peru and attempted to open negotiations with Peru to resolve the dispute without litigation. These steps, however, were pretextual and never demonstrated a good faith negotiating position. The evidence adduced at trial established that on May 1, 1996, following the execution of each of the two assignment agreements, Elliott sent joint notices of the assignments to Peru’s reconciliation agent, Morgan Guaranty, to register its debt in order to obtain Elliott’s pro rata share of the partial interest payments Peru was preparing to make in connection with its proposed Brady restructuring, and to become eligible to participate in the restructuring itself. On May 2, 1996, Elliott sent a letter, signed by Newman, to Banco, Banco Popular del Peru, and the Republic of Peru informing them that Elliott was now one of their creditors and that Elliott wished to initiate discussions regarding repayment. Newman also spoke by telephone on May 17, 1996, with Mark Cymrot, counsel for Peru, who had responded to Elliott’s May 2nd letter in a letter dated May 9, 1996. Michael Straus, who had by this time been advising Elliott with respect to its Peruvian investments, and Andrew Kurtz were also on the call for Elliott. Shortly thereafter, Elliott received letters from Peru’s Director General of Public Credit of the Ministry of Finance and Economy, addressed to Elliott, Swiss Bank, ING and Morgan Guaranty, dated May 17, 1996, stating that Peru refused to recognize Elliott as a lawful creditor on the grounds that it was not a “financial institution” within the meaning of the 1983 Letter Agreements. Elliott also learned, shortly after receiving these letters, that Peru was otherwise interfering with Elliott’s rights as a creditor, for example, by attempting to reverse Morgan Guaranty’s partial reconciliation of Elliott’s debt and prevent Morgan Guaranty from sending Elliott the partial interest payments to which Elliott was entitled under the 1983 Letter Agreements. On May 21, 1996, Elliott again wrote Ban-co, Banco Popular del Peru and the Peru purportedly to open a dialogue. On June 19, 1996, Elliott informed Peru, through its counsel, that the position it had taken was unjustified and commercially unreasonable and had the affect of interfering with processing of interest payments Elliott was due. On June 25, 1996, Paul Singer wrote Peru demanding that it “cure its defaults.” On July 11, 1996, counsel for Elliott again reiterated to Peru, through counsel, that Peru had no role in the assignment process, no right to veto Elliott as a legitimate assign-ee and creditor, and no right to interfere with Elliott’s rights to the interest payments it was due. Finally, in September 1996, Elliott initiated a meeting with the Defendants, which was unproductive. Shortly thereafter Elliott filed the instant action. Elliott contends that a series of letters they sent, and discussions they initiated, demonstrate an intent to negotiate a settlement of the debt without bringing an action. None of the evidence introduced, however, demonstrates a negotiating position short of demanding full payment — a position Elliott must have known Peru would reject under the circumstances of its negotiation of the Brady plan restructuring with the BAC. In sum, (1) Elliott’s admission that their investment strategy was to be paid in full or sue, Kurtz and Newman’s contrary testimony notwithstanding, equated to an intent to sue because they knew Peru would not, under the circumstances, pay in full; (2) Elliott hired Newman and Straus to guide their investments in Peruvian debt, both of whom had recent experience suing Sovereigns; and (3) Elliott delayed the closing of its Peruvian debt trades until after the Second Circuit denied Peru’s motion for a stay pending appeal in the Pravin Banker litigation; (4) Elliott’s purported alternative investment strategies either were not seriously considered prior to deciding to purchase the debt, or were not reasonable given its profit expectations; and (5) Elliott’s overtures to Peru to settle the dispute short of litigation were a pretext. III. Peru’s Supervening Decree Replacing the Bank as Obligor Banco is an autonomous financial institution that is a Peruvian state enterprise. Banco is governed by its own internal policies and Board of Directors that makes business decisions independent of the government. The primary functions of Banco are to manage the public treasury, to centralize the collection of taxes and to act as a financial agent for Peru. None of these functions is reserved to Banco, but can be carried out by any Peruvian banking institution. For example, the collection of taxes is carried out by other Peruvian banks. Banco prepares a yearly budget. Banco does not receive any operating funds from Peru. Like any Peruvian financial institution, Banco is subject to the supervisory authority of the Superintendencia de Banca y Seguros, which ensures that any banking functions of Banco are carried out in accordance with Peruvian laws and regulations governing the banking industry. Banco is subject to the same supervisory authority as other Peruvian financial institutions. Banco is obligated to comply with Peruvian laws and banking regulations. Failure to do so could result in the imposition of sanctions against the bank and its employees. Banco receives deposits from governmental entities such as the central government and state-owned companies, as well as from public employees. However, these entities are under no obligation to deposit their funds with Banco. Moreover, once deposited with Banco, the bank can use those monies as it sees fit subject to the depositors’ right to withdraw their funds. Banco also lends money to entities of the central government and municipal and provincial governments. Those entities are required to re-pay any money lent to them. Pursuant to Supreme Decree 112-86-EF, Banco and the Peruvian Ministry of Economy and Finance entered into a loan agreement through which Peru formally recognized its obligations as guarantor of certain loans previously made by Banco to state-owned entities with funds obtained from foreign banks. Those loans consisted primarily of short-term working capital loans such as the debt at issue in this case. In April 1994, Peru issued Urgent Decree 09-94. This decree purported to replace Banco as the debtor on the underlying loans that were the subject of Supreme Decree 112 and substitute the Ministry of Economy and Finance as the obligor. CONCLUSIONS OF LAW I. Peru and Banco Have Breached Their Contracts A. Banco Is Liable Under the Contract Under New York law, to establish a breach of contract a plaintiff must plead and prove the following elements: (i) proof of the existence of the contract; (ii) breach by the other party; and (iii) damages suffered as a result of the breach. See Furia v. Furia, 116 A.D.2d 694, 695, 498 N.Y.S.2d 12, 13 (2d Dep’t 1986). Failure to tender payment pursuant to a contract is a material breach. ARP Films, Inc. v. Marvel Entertainment Group, Inc., 952 F.2d 643, 649 (2d Cir.1991). Therefore, where a contract unambiguously requires the defendant to make payments pursuant to its terms, and the defendant fails to make said payments, judgment must issue in favor of the plaintiff. See Daiichi Seihan USA v. Infinity USA, Inc., 214 A.D.2d 487, 488, 625 N.Y.S.2d 527, 528 (1st Dep’t 1995). These principles are routinely applied in favor of creditors suing foreign states on defaulted loan agreements. See,, e.g., Allied Bank Int’l v. Banco Credito Agricola de Cartago, 757 F.2d 516 (2d Cir.1985); Pravin Banker Assocs., Ltd. v. Banco Popular Del Peru, 109 F.3d 850 (2d Cir.1997). Here, it is undisputed that (1) Banco borrowed $7,000,000 in principal, and owes interest thereon, pursuant to the Letter Agreements; (2) Elliott is the assignee of various banks’ interests in and to these amounts owed by Banco under the Letter Agreements; (3) Banco has failed to pay to Elliott the amounts due and owing to it under the Letter Agreements and has therefore breached the Letter Agreements; and (4) Elliott has suffered damages in excess of $7,000,000 as a result thereof. Because Banco has not disputed the basic facts with respect to its failure to pay these debts, Banco has breached the Letter Agreements. B. Peru Is Liable Under the Guaranty To recover under a guaranty, a plaintiff must establish the , existence of the loan, the unconditional guaranty, and the guarantor’s failure to pay in accordance with the guaranty’s terms. Bank Leumi Trust Co. v. Rattet & Liebman, 182 A.D.2d 541, 542, 582 N.Y.S.2d 707, 708 (1st Dep’t 1992); First Interstate Credit Alliance, Inc. v. Sokol, 179 A.D.2d 583, 584, 579 N.Y.S.2d 653, 654 (1st Dep’t 1992). Here, it is undisputed that (1) there remains outstanding $20,682,699.04 in principal, plus interest, borrowed under the Letter Agreements; (2) in the Guaranty, Peru guaranteed repayment to the various original lenders or their assignees of any such amounts due and owing under the Letter Agreements; (3) Elliott is the assignee of various lenders’ interests in and to the Letter Agreements; (4) the original borrowers are in default and Peru has failed to pay to Elliott the amounts due and owing under the Letter Agreements and has therefore breached the Guaranty; and (5) Elliott has suffered damages in excess of $20,682,699.04 as a result thereof. Because Peru has not disputed the basic facts with respect to its failure to pay these debts under the Guaranty, Peru has breached the Guaranty Agreement. II. Elliott Has Violated Section 489 of the New York Judiciary Law The Peru Defendants contend that, although the debt is valid and the agreement has been breached, Elliott’s claim must be dismissed because the assignments violate New York Judicial Law § 489, which makes unlawful the purchase of debt “with the intent and for the purpose of bringing an action or proceeding thereon.” Elliott, on the other hand, contends that as a factual matter it did not purchase the debt with the requisite “intent and purpose,” and as a legal matter the statute does not sweep as far as to render unenforceable their claim against . Peru. Elliott’s position is strong as a matter of policy in the world of commerce. Peru borrowed billions of dollars from commercial banks in exchange for the obligation to repay the principal with interest. Peru spent the borrowed funds, and now refuses to repay an assignee of the debt. Failure to enforce a bargain between sophisticated parties such as Peru and their lenders would, according to Elliott, undermine reasonable expectations about contract law, the terra firma upon which contemporary business transactions are based. Moreover, restrictions on the rights of commercial lenders to assign the debt were not negotiated for by Peru, and imposing some restriction here seems at odds with the strong policy in favor of the free alienability of property. Cast in this light, § 489 seems to fit uncomfortably with current sensibilities — a relic of Medieval English legal concerns about the perversion of judicial process given effect by the common law doctrine of champerty. Yet, the Court’s role here is not to make policy assessments — to rank its preferences among contract, property, and cham-perty doctrines. Instead, a statute enacted by the New York State legislature must be interpreted in the light of its text, history, and precedent. As a statutory creation, § 489 — re-enacted by the New York legislature as recently as 1965 — must be understood on its own terms, whatever its roots. Although Elliott suggests several theories by which the statute should be limited to exclude the instant transaction, the theories fail for lack of support in the text, history, and relevant precedent. At the outset, the findings above establish that the Peru Defendants proved by clear and convincing evidence that Elliott purchased the debt with the intent to sue thereon. Clear and convincing evidence has been defined as that quantum of proof which “produee[s] in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established, evidence so clear, direct and weighty and convincing as to enable the [factfinder] to come to a clear conviction, without hesitancy, of the truth of the precise facts in issue.” Cruzan v. Director, Missouri Dept. of Health, 497 U.S. 261, 285 n. 11, 110 S.Ct. 2841, 111 L.Ed.2d 224 (1990) (citation omitted). Accord Reed v. State, 133 A.D.2d 107, 111, 518 N.Y.S.2d 645, 648 (2d Dep’t 1987), rev’d on other grounds, 78 N.Y.2d 1, 574 N.E.2d 433, 571 N.Y.S.2d 195 (1991). The Peru Defendants have met this standard. The intent to sue, however, is not sufficient to violate § 489, which requires that the debt be purchased “with the intent and for the purpose of bringing an action or proceeding thereon.” N.Y.Jud. Law § 489 (emphasis added). As the Court of Appeals emphasized in Moses v. McDivitt, 88 N.Y. 62 (1882), “[t]his language is significant and indicates that a mere intent to bring a suit on a claim purchased does not constitute the offense; the purchase must be made for the very purpose of bringing such suit, and this implies an exclusion of any other purpose.” Id. at 65. See also Fairchild Hiller Corp. v. McDonnell Douglas Corp., 28 N.Y.2d 325, 329, 270 N.E.2d 691, 693, 321 N.Y.S.2d 857, 860 (1971) (same). Yet in the cases where courts find a § 489 violation, the assignee had a purpose other than to bring an action — e.g., to gain royalty-free use of patented technology, see Refac Int’l. Ltd. v. Lotus Dev. Corp., 131 F.R.D. 56, 57 (S.D.N.Y.1990) (Mukasey, J.). Moreover, the Court of Appeals has noted that the statute would be violated, for example, if the “purpose” of the assignment was to “obtain costs,” see Moses, 88 N.Y. at 65, or to “oppress” debtors, see Wetmore v. Hegeman, 88 N.Y. 69, 73 (1882). Accordingly, the significance of the requirement that the assignee have “the purpose of bringing an action” must be gleaned from text of the statute, as well as its precedent and history. New York Court of Appeals precedent provides little guidance for construing the statute’s proper scope. The Court of Appeals has confronted the issue of the meaning of the statutory phrase “purpose of bringing an action” twice. The first occasion was in the case of Moses v. McDivitt, 88 N.Y. 62 (1882), where the court reviewed for error a jury instruction for a predecessor of § 489. The judge instructed the jury that “if [Moses’] intention in buying [the bond] was to use it to compel [McDivitt] to do a particular thing, as to assign stock for instance, and if he would not comply with his wishes to sue it, that would be a violation of the statute.” Id. at 67. The facts adduced at trial tended to establish that Moses had paid $2,000 to purchase a $2,500 bond and mortgage for the purpose of inducing or coercing McDivitt, as a condition of extending the time of payment, to assign to him certain stock in a publishing company in which he was interested in order to control an election of directors of the company. The court held that this purpose, “whether honest or reprehensible, was not within the prohibition of the statute.” Id. at 67. The intent to coerce did not amount to an intent to sue, which “was to be resorted to only for the protection of [Moses’ rights] in ease the primary purpose of the purchase should be frustrated.” Id. at 67-68. Accordingly, the court remanded the case for a new trial. The Moses court held that a purchase of bonds by an attorney is not “made illegal by the existence of the intent on his part at the time of the purchase, which must always exist in the case of such purchases, to bring suit upon them if necessary for their collection. To constitute the offense the primary purpose of the purchase must be to enable him to bring a suit, and the intent to bring a suit must not be merely incidental and contingent.” Id. at 65 (emphasis added). Here, however, Elliott intended to collect 100% of the debt not by negotiating, participating in a debt-for-equity swap, trading, or going along with the Brady plan, but rather by suing. Unlike Moses, the intent Peru established was the intent to sue, and that intent was not contingent or incidental. The Court of Appeals again addressed the prohibited purpose almost 100 years later in Fairchild Hiller Corp. v. McDonnell Douglas Corp., 28 N.Y.2d 325, 329, 270 N.E.2d 691, 693, 321 N.Y.S.2d 857, 860 (1971). In Fair-child, the plaintiff acquired the operating assets of an aircraft manufacturer, Republic Aviation Corporation (“Republic”). One component of the operating assets was Republic’s outstanding contracts and any related claims. Pursuant to this agreement, plaintiff acquired a claim against the defendant. After two years of unsuccessful negotiations, plaintiff brought an action against defendant, and defendant moved for summary judgment on the grounds that the assignment violated § 489. The court denied defendant’s summary judgment motion because “[t]he acquisition of the claim was simply an incidental part of a substantial commercial transaction....” Id. at 330, 270 N.E.2d at 693, 321 N.Y.S.2d at 860-61. The facts in Fairchild, therefore, are easily distinguished from the instant case, where Elliott’s assignments were not an incidental part of a major corporate acquisition, and Elliott did not engage in two years of negotiations. Indeed most of the courts interpreting § 489 have decided the case by finding that intent to sue was merely contingent or incidental, and not primary. Therefore, few cases have addressed the legal issue of whether the type of assignment of debt here is within the scope of the statute. In Elliott Assocs. v. Republic of Panama, 975 F.Supp. 332 (1997), another case brought by Elliott suing on sovereign debt, the Honorable Denny Chin granted summary judgment to Elliott and rejected Panama’s § 489 defense. The court, however, assumed that Elliott had “the intent to sue if necessary to collect on the loans,” id. at 340 (emphasis added), but concluded that on the record presented Elliott had possibilities other than litigation, including trading and direct negotiation with Panama. Id. at 340-41. Accordingly, the court held that the facts adduced by Panama did not raise a genuine issue of material fact regarding Elliott’s contention that its intent to sue when it purchased the debt was merely contingent. The court did not hold that if the intent to sue was found, that the statute would not apply to the type of transaction at issue — an assignment among sophisticated parties of all right, title and interest in sovereign debt. Similarly, in Banque de Gestion Privee-Sib v. La Republica de Paraguay, 787 F.Supp. 53 (S.D.N.Y.1992), the Honorable Michael B. Mukasey granted summary judgment to the plaintiff on its claim that Paraguay breached its contract to pay on its debt, and rejected Paraguay’s § 489 defense. The court held that plaintiff had not formed the intent to sue prior to the debt assignment, and that the intent to sue was merely incidental and contingent. Id. at 56-58 (quoting Moses, 88 N.Y. at 65). Accordingly, neither Panama nor Banque de Gestión PriveeSib decided that, if an intent that was not contingent or incidental was found, that § 489 would not apply. Elliott also cites Drake v. Northwest Natural Gas Co., 165 A.2d 452 (Del.Ch.1960). In Drake, a New York lawyer purchased defaulted corporate debt at a deep discount at an auction and promptly turned the notes over to his brother-in-law, another att