Don’t Cry for Me Argentine Bondholders: Plaintiffs Reject Argentina’s Proposal

Don’t Cry for Me Argentine Bondholders: Plaintiffs Reject 
Argentina’s Proposal 

The plaintiffs have squarely rejected the proposal that
Argentina made in its March 29 reply to the Second Circuit’s
March 1 inquiry as to how Argentina planned to “make
current” the “original bonds” held by the plaintiffs. The stage
is now set for the Second Circuit to rule.

On March 1, the Second Circuit offered Argentina the opportunity to tell the Court “how and
when it proposes to make current those debt obligations on the original bonds that have
gone unpaid over the last 11 years.” On March 29, Argentina replied, indicating that
Argentina was willing to offer the plaintiffs a package of new bonds that it said would allow
the plaintiffs to realize the values that the Exchange Bondholders have realized, but not the
values inherent in the original bonds upon which the plaintiffs have sued. The Second
Circuit then asked for the plaintiffs’ views, which they have now provided in a response filed
on April 19. (That response, together with the other papers relating to this appeal, are all
available on our Argentine Sovereign Debt webpage: www.shearman.com/argentinesovereign-debt.)

The plaintiffs’ rejection was harsh: 

In response, Argentina has now submitted a predictably and characteristically defiant
response that fails completely to comply with its equal treatment obligations or to take
seriously the specific directions in this Court’s March 1 Order. Instead of proposing a
formula for “repay[ing] debt obligations on the original bonds” . . . Argentina offers
to eliminate those obligations in return for new, deeply-discounted, potentially
unenforceable, and unmarketable paper, payable decades hence. Indeed, according to
Argentina’s own math, these new securities would be worth less than 15% of what
Argentina owes on the FAA Bonds . . . Argentina’s response manifests yet again its
contempt for its obligations, the laws of the United States, and the orders of U.S.
courts.

Plaintiffs also comment (as have we) that Argentina’s position, as articulated in its March 29 letter, is inconsistent with
the Second Circuit’s October 26 decision: “Argentina acts as if this court had neither issued the October 26 Decision nor
denied its petition for rehearing from that ruling.” In particular, Argentina’s response, premised as it is on the notion
that the plaintiffs will give up the original bond contracts they currently hold, clearly disregards the Second Circuit’s
statement that “. . . plaintiffs were completely within their rights to reject the 25-cents-on-the-dollar exchange offers.
And because the FAA does not contain a collective action clause, Argentina has no right to force them to accept a
restructuring, even one approved by a super-majority.” October 25 decision, at 26 fn. 15.
We expect that the Second Circuit will now decide this case without further ado, probably in the next four to six weeks. It
continues to be our view that Argentina has provided the Second Circuit very little to work with, and little reason to want
to do so.