Should Argentina Default On Its Debt?

[French jurist]

Huh? Legally, all Argentines are responsible for the debts; fairness is a more abstract question.

Huh? And bankruptcy rules?

 

[ajoknoblauch]

Huh? And bankruptcy rules?

So, when Argentina declares bankruptcy, who will take charge of its assets?

 

[dennisr]

Sure, Singer first forced Argentina to borrow 90 billion US$ under New York law, and then he forced the Argentine government to steal and waste every cent of it, didn't he?

I don't like hedge funds and people like Singer, but it was Argentina, which borrowed and wasted the money, as usual claiming that "it is somebody else's fault".

You will get no argument from me about the credibility of Argentina and its spending habits. However, where in the hell in my post did I say anything about the merits of Argentina's borrowing habits and such. Point was about settled bond holders and Singer.

 

[Don Alberto]

... with a strange Pari passu interpretation...

Could you please tell us what is strange about judge Griesa's pari passu interpretation?

In 2000 the Court of Appeal in Bruxelles used the exact same interpretation of "pari passu" as did judge Griesa in New York.

Pari passu migrated from commercial law (where it is also called pro rata) into sovereign debt practice, where it is usually interpreted as "on equal terms" or "in accordance with the size of the claim".

Pari passu means that the debtor is obliged to pay its creditors equally. When the debtor cannot pay everything it owes to all of its creditors, pro rata payments are required. A creditor protected by a pari passu clause may seek to enforce its pari passu right to be paid the same percentage of the amount it is currently due as the debtor pays to other creditors.

You may not like it, but then you should not sign documents, which invokes pari passu.

 

[Don Alberto]

You will get no argument from me about the credibility of Argentina and its spending habits. However, where in the hell in my post did I say anything about the merits of Argentina's borrowing habits and such. Point was about settled bond holders and Singer.

I was ironizing over who is to blame, especially your

"Singer f*** with a 1-3% holding in Argentina's defaulted bonds is now controlling and impeding payment to the settled bond holders: ~90%"

whereby you imply that this is somehow Singers fault, not Argentina's. The idiot actions of the Argentine government placed Singer in this position.

 

[ajoknoblauch]

I was ironizing over who is to blame, especially your

"Singer f*** with a 1-3% holding in Argentina's defaulted bonds is now controlling and impeding payment to the settled bond holders: ~90%"

whereby you imply that this is somehow Singers fault, not Argentina's. The idiot actions of the Argentine government placed Singer in this position.

Singer is no philanthropist, but Argentina's response to him has made its own bad position worse.

 

[Don Alberto]

...Also Argentina applied the IMF policies during the 1990s,...

- and dropped them again because you cannot buy votes with austerity.

 

[Don Alberto]

I don't rule the country and I have been affected too like many others by corruption; my only crime is not being a heroe to fix it. If Arg signed that accepts money this is a fact, but if signs that the justice will be applied in other country, I am not sure if this is legal.

It is about as legal as it can get. Numerous loans to nations are on the same conditions (e.g. under New York law), except since 2005 they contain a protection against hold-outs - the majority of creditors decide about restructuring.

 

[dennisr]

Indeed, Argentina played right into Singer's hand. However, the judges decision to bar Mellon Bank of New York to disburse payments to settled bond holders until Singer's claim was satisfied was irresponsible in my view. The judge should have been above the rhetoric and considered the settled bond holders position. He disregarded their claims. Settled bond holders became collateral damage and now are a new problem which exacerbates an already complex problem. At the end of the day, Singer walks and everyone else is back to square one, another round of lawyers and years of litigation. Guess it is the new and improved American way.

 

[Rich One]

Some Politicians believe that Singer should receive the same $50 million he invested since 2001 with no interests and back payments.