unser Anwalt in New York.....

As most of our clients know, Argentina has evaded enforcement of judgments against it by keeping its assets beyond the reach of our execution efforts. We (on behalf of some "test case" clients, and working with several hedge funds with large bond holdings, also with test cases) devised an argument based on the pari passu/"equal treatment" provision in our clients' bond indentures, which has resulted in our obtaining an injunction from Judge Griesa against Argentina, which also covers other persons acting "in active concert or participation" with Argentina, preventing payments on the Exchange Bonds unless our clients receive "ratable" (proportionally equal) payments on our bonds. The Second Circuit (appeal court) has affirmed that injunction. The same appellate panel heard further argument on February 27 about which specific parties (banks, agents, attorneys, etc.) would be considered to be acting in concert with Argentina, and about how to define what a "ratable payment" to our clients would be. Shortly after the argument, the panel ordered Argentina to specify, on or before March 29, exactly what payment it would be willing to make to satisfy its ratable payment obligation.

Although no one can reliably predict what the appellate court will decide until it issues its decision, it is widely agreed that the argument went well for us and poorly for Argentina and the Exchange Bondholders. We think it is likely that the court will hold Argentina to its obligation, which will require Argentina either to make ratable payments to the clients included in the motions; to default on all obligations, including the Exchange Bonds; or to disobey the injunction, which would cause many problems, especially for the banks, etc.  There is a stay of the injunctions pending decision by the Second Circuit. Exchange Bond interest payments are due at the end of March and again in July. While Argentina might seek to appeal an adverse decision to the U.S. Supreme Court, that is unlikely to succeed, and the stay might well not remain in effect for such an appeal.

We are all waiting to see how this will play out.

I will keep you informed of any further developments.