Should NML move to lift the stay?
An update on where matters stand in NML v. yesterday's post, is whether NML will ask the to lift the stay on the ratable-payment part of the injunction. Michelle Celarier at the New reports that NML is considering doing just that.: I don't see it listed on the court's calendar on PACER, but the parties reportedly had a meeting scheduled for this afternoon with Judge Griesa to discuss Argentina's plan to let exchange bondholders swap into bonds governed by Argentine law. Whether or not the meeting happens, the more important question, as I noted in
As I said several days ago, if I were NML, my inclination would be to ask the Second Circuit to lift the stay. Doing so would jeopardize Argentina's ability to pay exchange bondholders at a time when it does not yet have a mechanism in place to circumvent the injunction. (I hate to sound so cynical, but Argentina has clearly announced that it won't comply.) Filing a motion to lift the stay also gives NML another chance to portray Argentina as a uniquely defiant and unsympathetic defendant. On the other hand, there is a potential cost to lifting the stay: the added urgency might highlight the significance of the case to the Supreme Court. Plus, the assigned to the Second Circuit could always re-impose the stay, taking away the leverage an order lifting the stay would give to NML.
Thus far, the Second Circuit has handled the case as if it wants to minimize the likelihood of Supreme Court review. First, both opinions characterize the case as involving a unique sovereign debtor and a unique clause. I don't think the court is very convincing in this effort. The impact of a precedent is settled by future litigation, not by judicial ipse dixit, and it's just not true that Argentina'spari passu clause is unique. Nevertheless, if the effort persuades the Supreme Court, the chances of review go down. Second, the Second Circuit has given Argentina all the process it could possibly want, including the current stay of the injunction. I'm speculating, but removing the stay might give the impression that the Second Circuit is trying to strong-arm Argentina into compliance.
NML's decision might be shaped by other considerations, too. Over at FT Alphaville, commenter arnoldbanker raises the intriguing possibility that the debt swap might also be designed to pave the way for an eventual settlement. That would represent a radical for President Kirchner. But perhaps renewed access to foreign capital markets is worth the price?