In which, regardless of recent calls on Argentina to negotiate on an amount to pay its holdouts in the pari passu case (or is it to give those calls teeth?)…
…Ted Olson, NML Capital’s lawyer, invites the Second Circuit to unfreeze an order to pay the holdouts ratably — and in full, by the terms of their defaulted bonds — at the next payment to restructured bondholders. Click for the doc.
Expect Argentina and those other bondholders to resist this motion like hell. The next payment’s due on December 2.
Still, this is also one perspective for catching up on the events in the pari passu saga since Argentina lost its last appeal at the Second Circuit in August. President Cristina Fernandez declaring that bondholders could swap into debt like for like, but paid “aquí en la República Argentina” for “la seguridad jurídica” — instead of New York law. Judge Thomas Griesa telling Argentina that his order for it not to do stuff like this was never stayed — and that it must tell him if it’s talked to bondholders about a swap. Justice Sonia Sotomayor stepping out as the Supreme Court rejected Argentina’s first bid for it to hear the case — though Argentina might get another chance in time.
It’s NML’s perspective of course. And one in which Argentina is very much the “uniquely recalcitrant” Big Bad of sovereign debt:
In light of President Kirchner’s speech and Argentina’s telling failure to disavow the scheme that speech announced, the only reasonable inference that can be drawn from Argentina’s conduct is that it is now preparing to implement that evasion scheme…Incredibly, Argentina did not produce a single document in response to the district court’s order. Instead, Argentina’s lawyers submitted a two-sentence letter asserting that Argentina “has no plans to violate the Anti-Evasion [Order].”Ex. A. That assertion is transparently false—disproven by President Kirchner’s own televised address, which detailed just such a plan, and her Economy Minister’s statement that this plan does not require any action by the legislature to further implement… Argentina’s response also simply ignored the disclosure obligations imposed by the district court’s October 3 order. That Argentina remains so utterly unconcerned with compliance with the orders of the district court demonstrates yet further that Argentina has no equitable claim to a stay of those orders…Requiring Argentina to abide by these contractual obligations would not subject it to any legally cognizable harm, and certainly not any irreparable harm. That is reason enough to dissolve the stay… As this Court has explained, the Injunction permits Argentina to choose to “pay all amounts owed to its exchange bondholders provided it does the same for its defaulted bondholders,” to pay each half, or to pay neither anything.
Note that NML says that any local-law swap would involve “billions of dollars of Exchange Bonds… requiring the cooperation of numerous financial institutions and sophisticated investors” — evidence of such cooperation, if it ever appears, should be unmistakable — although simultaneously says it’s enough Argentina simply won’t disavow CFK’s plan.
NML also argue that the Second Circuit should lift the stay because of the Supreme Court’s rejection, and because even if the justices take the case later on they’ll only decide against Argentina. (NML even suggest to the court that they can see Argentina trying to stretch the case out to 2015, which let us tell you, is a solemn thought now we’re almost 50 posts into the saga.)
But that’s difficult to see anyone taking seriously. If anything, the Second Circuit could think that Argentina should have every opportunity for due process, or for more rope to hang itself, before this case is over.
Or perhaps before Argentina sees sense and settles.