- Worst case scenario: The panel of judges finds that the country violated pari passu and condemns it to pay the vultures as Griesa ordered, in one cash payment, conditioning the paying out of debt payments to the compliance with the sentence. While unlikely, these same judges already rejected Griesa’s sentence affecting American intermediaries and even others outside its jurisdiction, this scenario would require a re-engineering of debt payments.

Lead Articles:

 

Clarin: “In the fight with the vulture funds, the country’s allies distance themselves”

 

Pagina/12: “Key support against the vultures”

 

OTHER NEWS ITEMS:

• Cristina again used a national broadcast in prime time, this time with a recorded message from the presidential office at the Casa Rosada, to announce she was sending the Iran agreement to Congress for approval, and to defend it as state policy.  She insisted that the deal did not involve any surrendering of sovereignty, and that there was no choice to negotiate with Iran because all of the accused in the AMIA bombing case are Iranian citizens, and “who else would we negotiate with besides Iran?”.  Her broadcast comes as the local Jewish community is increasingly united against the agreement, with the DAIA (which at first was keeping an open mind) toughening its opposition.  A pro-K columnist in Pagina/12 defended Cristina’s move as “a break with the failure” of the almost 20 years of effort to reach justice.
• A 21% pay hike for members of Congress – agreed to in secret by the political blocks last year – has set off a wave of public protest among much of the opposition now that the hike is going public.  It is a fairly habitual ritual whenever there is a pay hike for Congress, where the ruling party has to defend and take flack for something that looks unseemly to the public, but this time Amado Boudou, as Senate President, took to lashing out at the media for the controversy.  “This is not just a campaign against the FpV, but against politics in general” on the part of “the newspapers La Nacion and Clarin.  They want a submissive government,” Boudou said.

 

 

Clarin

In the fight with the vulture funds, the country’s allies distance themselves

 

Friday, February 8, 2013

 

By Ana Baron

 

Only 20 days before the hearing that will take place in the Court of Appeals to determine when and how Argentina must pay the vulture funds 100% of what they are owed, the holders of restructured bonds yesterday had an epistolary clash with the vulture funds.  In that clash, Argentina’s allies made an effort to distance themselves from the government.

 

The protagonists of the clash were no more or less than David Boies.  He is the attorney that defended former U.S. presidential candidate Al Gore in the electoral dispute that he had with ex-president George Bush in 2001, and who now represents EBG, the group of holders of restructured bonds.  And also Ted Olson, the attorney that represented Bush then and who is defending NML now.  In the letter sent yesterday to the Court of Appeals, Boies asks that in the February 27 hearing they grant him 10 minutes to speak on the position of his clients.  Until now the Court of Appeals had established that for that day Argentina would have 15 minutes and NML 15 minutes.  But it still hasn’t granted any time for the other interested parties.

 

Boies explains in his letter that the EBG has to be heard because its position is different from Argentina.

 

He says that EBG is not opposed to the court ordering Argentina to pay the debt it has with the vulture funds.

 

What it opposes is that the order puts in danger the rights of the EBG.  “Despite that the conduct of the Argentine Republic over the last decade could have influenced the equitable relief granted by the district court, it has not facilitated its stubbornness; on the contrary, like the plaintiffs (read the vulture funds), they were victims of the Argentine Republic’s default.” 

 

Neither slow nor lazy, Ted Olson, the attorney that represented ex-president George Bush and who know defends NML, sent his letter arguing why the court shouldn’t grant to Boies, nor to any of the other involved parties in this case, the 10 minutes they ask for to speak, because Argentina will speak for them.

 

“Argentina in its brief has dedicated considerable attention to the issues put forth by the non-plaintiff parties… If there is a need to argue them separately, then those making the request will have to share the 15 minutes granted to Argentina,” he writes. 

 

In his letter, Olson adds that if the court decides to satisfy those requests to broaden oral arguments, NML “asks with all due respect that it increase the same amount of time” for him to be able to have adequate opportunity to respond to any new argument that could arise.

 

 

Pagina/12

Key support against the vultures

The New York court accepted the request of the Obama government to participate in the demand for review of Griesa’s ruling by all 13 judges of the court, a recourse requested by Argentina.

 

Friday, February 8, 2013

 

By Tomás Lukin

 

The Court of Appeals in New York accepted the U.S. government making a filing backing the position of Argentina in the dispute that the country has with the vulture funds.  The court authorized the American authorities to participate in the demand for a review with the 13 judges of the court about the underlying issue: the validity of the clause of equal treatment, or pari passu.  That review was requested by Argentina but still has not been opened nor denied by the Court of Appeals, where a panel of judges still must decide on a payment formula for the complaint from the vultures led by the fund NML of Paul Singer that it not discriminate against those who participated in the swaps nor put at risk the functioning of the financial system of New York.

 

On February 27, the formal deadlines pass for the litigation, set by the court, with the hearing among the parties in the New York courtroom.  The court cited NML and the law firm of Cleary Gottlieb Steen & Hamilton, which represents Argentina, to hold oral presentations of 15 minutes each.  On Tuesday, Bank of New York, payment agent for the foreign debt which defended its interests and strengthens Argentina’s position in this case, asked the judges for 10 minutes to explain its position.  “We know that you do not intend to accept more speakers.  But we need to argue because no one could better explain” the consequences that there would be for the American financial system by upholding the ruling of lower court Judge Thomas Griesa, the banking entity argued.

 

When that hearing ends, the judges that rejected the payment formula in cash put forth by Griesa will have to decide on a payment mechanism for Argentina.  The country put on the table the possibility of offering the vultures the same conditions of the haircut, reduction of interest and extension of time from the swap that the speculative funds already turned down twice, hoping to collect the total of their balances.  The government’s legal advisors believe that the judges could take, at a minimum, between two and three months to issue a sentence.  On the economic team of Economy Minister Hernan Lorenzino, they are handling different possible scenarios, from minimum to maximum, for that moment:

 

- Condemnation with swap: The Court of Appeals argues that the country violated the clause of equal treatment and indicates that to remedy this situation, Argentina will have to pay under the same conditions as the bondholders that entered the debt swap, a path that the government opened in December.  As a sign of good will, while the vultures, by their nature, will not participate, the government will send the proposal to reopen the swap to Congress.

 

- Abstract condemnation: The judges find that Argentina must pay the vultures all that they demand – US$1.33 billion- but without affecting the payment circuit, nor the intermediaries.  That way, Argentina would have a sentence against it that according to CFK will never be paid but could continue covering foreign debt payments without problems in New York.

 

- Worst case scenario: The panel of judges finds that the country violated pari passu and condemns it to pay the vultures as Griesa ordered, in one cash payment, conditioning the paying out of debt payments to the compliance with the sentence.  While unlikely, these same judges already rejected Griesa’s sentence affecting American intermediaries and even others outside its jurisdiction, this scenario would require a re-engineering of debt payments.

 

In the last two cases, the legal path will continue to be through an appeal to the Supreme Court.  While it’s rare that the highest court would accept those cases, at Economy they believe that the arguments on violating sovereign immunity and the public interest – the impact on the functioning of New York as an international financial center – will allow the top court to take the case.

 

On Lorenzino’s team, they don’t dismiss the possibility that the Court of Appeals would authorize, even after the sentence of the three-judge panel is known, the en banc review on the underlying question, the pari passu clause.  If it reaches that level, the court already accepted the presentation of the government of the United States.