Usually, the United States wouldn’t get involved in a dispute over
contract interpretation, which is at the heart of the cases at the 2nd
Circuit. But the Justice Department believes Argentina’s appeal
implicates a “cornerstone” foreign economic policy. Last December, U.S.
District Judge Thomas Griesa of federal court in Manhattan issued a
series of orders in various bondholder cases against Argentina
concluding that under the standard contract provision known as pari passu
(or “equal footing”), Argentina must pay the vulture funds in full
before making payments to investors who agreed to participate in two
rounds of restructurings that followed Argentina’s 2002 bond default. In
February, Griesa issued injunctions based on those orders, which meant
that Argentina could not make any payment to investors who were issued
new debt in the 2005 and 2010 restructurings until it paid the holdouts
everything it owes them.
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