rolf´s argentinien-blog: US Supreme Court: weighing in on pari passu?

Dienstag, 16. April 2013

US Supreme Court: weighing in on pari passu?

Apr 15, 2013 8:45pm by Jude Webber

The main players are the same – Argentina, holdout creditors. But does the US Supreme Court’s request for the US government to give its opinion in an Argentine appeal regarding bank assets mean that it is interested in getting involved in the ongoing holdout saga over equal treatment, or pari passu?

Not necessarily, is the short answer.

The Supreme Court has asked for the US Solicitor General’s views as Argentina seeks to block holdouts from accessing bank records to track its international assets.

Though it is tempting to see this request from the Supreme Court as a hint that it can’t wait, eventually, to get its paws on the the pari passu case, the reality is more prosaic. There was actually a legal precedent for this in a case involving Iran.

And in that case, as Joseph Cotterill over at FT Alphaville points out, the Supreme Court asked the US for its views but didn’t end up taking the case.

In the pari passu saga, which centres on how Argentina should remedy its failure to pay holdout creditors on an equal footing to the holders of bonds it issued in two rounds of restructuring, the next deadline is looming: the holdout litigants, led by Elliott, a US fund, have until April 22 to respond to Argentina’s proposal, spelled out last month, to pay them the same as in the 2005 and 2010 swaps.

They will of course reject this out of hand, and then, barring more surprises (such as the Second Circuit Court of Appeals, which is now looking at the case, going back to any of the parties for more information), the curtain will have risen for the final act – a ruling. No one knows for sure, but lawyers guess it will take the appeals court anything from a couple of weeks to several months to rule.

Whoever loses is expected to attempt to appeal to the Supreme Court, but the court only takes a tiny fraction of cases and there is no guarantee it would take this one.

And the fact of the matter is, as things stand just now, no one really has any clue what the the appeals court will rule, either on the question of the payment formula (cash now, a lot of it, or bonds later?); whether third-parties should be barred from processing payments to holders of restructured bonds unless the holdouts are paid at the same time, and everything else.

The Supreme Court’s request in the bank assets holdout case is interesting, but probably meaningless in the context of the pari passu saga. Nothing for it but to keep waiting.