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If some or all of Argentina's Exchange Bond holders accelerate their bonds after last night's default, the amount Argentina owes NML et al. under the terms of Judge Griesa's injunction could plummet.
Here is the relevant language:
Such "Ratable Payment" that the Republic is ORDERED to make to NML shall be an amount equal to the "Payment Percentage" (as defined below) multiplied by the total amount currently due to NML in respect of the bonds at issue in these cases (08 Civ. 6978, 09 Civ. 1707, and 09 Civ. 1708), including pre-judgment interest (the "NML Bonds").
Such "Payment Percentage" shall be the fraction calculated by dividing the amount actually paid or which the Republic intends to pay under the terms of the Exchange Bonds by the total amount then due under the terms of the Exchange Bonds.
Before acceleration, the total amount due from Argentina on the Exchange Bonds is the total unpaid coupon (little x). If Argentina pays the Exchange Bond holders their full coupon before acceleration, the Payment Percentage it owes NML et al. is x/x=1, or 100% of the $1.5 billion or so currently due NML.



Posted 8 hours 42 min ago

The phrase "it depends" was invented 130 year ago by a small group of drunk lawyers from London and New York for the sole purpose of annoying first-year law students, nonlawyers, and people from civil law jurisdictions. Like all things annoying, "it depends" is enjoying a surge in popularity as tensions spike in the Argentine debt saga."It depends" is a magically useful phrase because it can cover up ignorance, describe uncertainty, or assign probabilities in a risky situation. If you are camping out in front of the Special Master's office in New York and hear "it depends" in response to a basic question, you might reasonably wonder which one it is. Here is a mini-guide: 
Q1: Will Argentina default?
A: It depends.*
*Of course it depends on whether the arch-enemies reach a deal. It also depends on whether they reach it in time for the Judge to stay his injunction so that the money sitting at Bank of New York Mellon (BNYM) is released into the relevant payment systems and sent on its way to the bondholders.
Q2: When do you know that Argentina is in default?
A: It depends.*



Posted 1 day 5 hours ago

Yesterday the Consumer Financial Protection Bureau, along with 13 state attorneys general (including from my new home state of Indiana), announced a $92 million settlement and issued an enforcement action against Colfax Capital Corporation and Culver Capital, LLC, known as Rome Finance, for targeting military families (and other consumers) with predatory loans to buy electronics, such as computers and televisions.
Rome Finance would offer credit to consumers for the purchase of such electronics primarily at mall kiosks near military bases, promising instant financing and no money down. Rome Finance then jacked up the price of the electronics, thereby masking true finance charges and APRs, withheld information on bills about balances and payments, and violated various states' laws in collecting the debts. In some instances, service members would receive statements indicating that the APR on their loan was 16% when the APR really was over 100%. The scheme is a reminder of the endless variations that companies peddling alternative financing / high-cost credit may use, and how broad laws against predatory lending need to be in order to be effective.



Posted 1 day 10 hours ago

Never let it be said that the wheels of international justice spin quickly, but, with the pace of a Siberian jail sentence, the Permanent Court of Arbitration finally handed down its merits award in the Yukos litigation.  (For those of you not in the know, Yukos was dismantled by the Russian government, nominally as seizure for back taxes -- some levied ex post -- purportedly as an attempt to stymie the political aspirations of its principal, Mikhail Khodorkovsky.)  The decision is a doozy: a unanimous and stinging denunciation of the Russian government in this series of transactions, with such zingers as "calculated expropriation" and accusations that the governmental scheme was "devious."  The award of a cool $50 billion was far less than the plaintiffs wanted but was a record-setter for the Court.
Russia, of course, is vowing "appeal" (not quite sure to where -- strongly worded letter?), but this really means the fight now enters the collection phase.  Maybe Russia has some frigates to grab?
Here's a link to the ruling.



Posted 1 day 20 hours ago

Unless the plaintiffs request a stay (and quick!), this will probably be the last request for Judge Griesa to stay the injunction before Argentina defaults officially fails to put money into the bank accounts of exchange bondholders. It is an emergency motion to stay filed by Knighthead Capital Management and other holders of euro-denominated bonds. They want the judge to stay the injunction for at least 90 days, so that they can try to round up votes to waive the RUFO clause, or through the end of the year, when the RUFO clause expires. They add that "a stay would not affect the plaintiffs at all, since they have not been paid since 2001..."



Posted 2 days 4 hours ago

I name names and point fingers in the Wall Street Journal.  NML gets some blame for overplaying its hand, but the fault primarily lies with the federal courts for letting the case go forward. I understand the courts being angered by an unrepentant debtor thumbing its nose at them, but the federal courts should know better than to get into a pissing match with a foreign sovereign. Federal judges are possessed of awesome powers, but not that awesome. It's not at all clear to me how Judge Griesa's going to get this case out of the hole he dug, and the recent reporting on the case indicates that he doesn't have any idea either. "We're in the soup."  Indeed. 



Posted 2 days 7 hours ago

Judge Griesa has approved Citibank's request to transfer funds it received in payment of both dollar- and peso-denominated, Argentine-law bonds. Order attached. The difficulty, as described in this recent letter from Citibank, is that some of the country's Argentine-law bonds are subject to the injunction, and some are not. The latter group includes bonds issued as part of the country's settlement with Repsol. But it isn't possible to distinguish the payments, because all the bonds have the same ISIN number. Oops. What to do? Judge Griesa "does not wish to upset the settlement with Repsol," so he has allowed Citibank to make payment on all of the Argentine-law bonds, including exchange bonds subject to the injunction. But just this once. The parties are supposed to work together to "devise a way to distinguish between the Repsol bonds and the exchange bonds before the next interest payment is due." I'm not sure how that will work, but I suppose there are bigger fish to fry at the moment. Tick tock. Tick tock.



Posted 3 days 3 hours ago

At its annual meeting, the National Conference of Commissioners on Uniform State Laws (NCCUSL) formally adopted the Uniform Voidable Transactions Act (UVTA). Under its provisions, I believe it says any service member in uniform will be able to avoid a transaction . . . . Hold on, let me give it a read.
Having now bothered to read it, I see it is actually an amendment to the Uniform Fraudulent Transfer Act (UFTA). If you are not familiar with the idea, let's say that you live in Tudor England and are some person named Pierce with a flock of sheep. You also happen to be insolvent. You give the sheep to your buddy, Twyne, because you much prefer you old pal to have the sheep than your creditors. Your creditors cry "baaa" because they could sell the sheep and get repaid. On these facts, Star Chamber will make Twyne give the sheep or their monetary equivalent to your creditors.  And, yes, we are talking about that "Star Chamber."



Posted 3 days 8 hours ago

The bill admits, that the whole amount divided among all the [creditors], was not enough to satisfy the complainant’s debt. What a singular proposition then to maintain, that although the whole were only entitled, in Law, to a less sum than this individual claims, out of the entire proceeds, yet that this and every other creditor of the same grade, by standing out and standing off, and pursuing his remedy separately, would realize the sum total of his claim! And if such a procedure were permitted, when and where would these successive foreclosures and sales or sequestrations terminate?
Sounds vaguely familiar
The answer can be found here.



Posted 3 days 12 hours ago

As Anna points out, there are indeed moments of poignancy in the pari passu litigation, largely having to do with the fact that, days from a major sovereign default induced in no small part by their rulings, the US courts only now seem to be discovering basic facts about the case. The transcript of the most recent hearing before the district court contains passages that might have been appropriate two years ago, but are depressing to encounter now.



Posted 6 days 7 hours ago