Gesamtzahl der Seitenaufrufe

Donnerstag, 28. Februar 2013

Griechenlands Steuerfahnder haben oft nicht mal Büros

IWF und EU meldenGriechenlands Steuerfahnder haben oft nicht mal Büros

 ·  Griechenlands Steuerfahndung kann laut einer EU-Studie immer noch nicht richtig arbeiten. Selbst die wenigen Angestellten hätten oft weder einen Computer noch einen richtigen Arbeitsplatz.
Griechenlands Steuerfahndung funktioniert nach einer Studie von IWF und EU weiterhin nur eingeschränkt. Die wichtigen Behörden der Steuerfahndung seien unterbesetzt, das Personal bestehe aus älteren Beamten und in vielen Fällen hätten die Angestellten weder Computer noch richtigen Arbeitsplatz in einem Büro. Eine von Athen versprochene Neuorganisation der Behörde sei am Widerstand der Gewerkschaften der Staatsbediensteten gescheitert, erklärten EU und Internationaler Währungsfonds (IWF) in einem Dokument, das am Donnerstag in der griechischen Presse veröffentlicht wurde.
Aus diesem Grund seien die Steuereinnahmen im Rückstand, was die Umsetzung des Konsolidierungsprogramms gefährde. Zudem stellen die Experten von EU und IWF fest, dass die Korruption in dieser Behörde noch nicht bekämpft worden sei.
Die Experten der Troika starten an diesem Sonntag eine neue Kontrolle der Bücher in Athen. Am Mittwoch hatte die Regierung unter Ministerpräsident Antonis Samaras angekündigt, sie nehme einen neuen Anlauf, um Steuerschulden einzutreiben: Das Finanzministerium drohte allen, die dem Staat mehr als 5000 Euro schulden, mit Gefängnisstrafen. Die Griechen selbst halten den Kampf gegen Steuerbetrug allerdings für aussichtslos.
Parallel droht das Finanzministerium auch Steuerbeamten Strafen an, die Steuersünder nicht anzeigen. Athen hofft damit einen Teil der 55 Milliarden Euro zu kassieren, die Unternehmen und Bürger dem Staat schulden.

No Food, No Phone, All Heat, Some Light: Dispatches from the Pari Passu Hearing posted by Anna Gelpern

No Food, No Phone, All Heat, Some Light: Dispatches from the Pari Passu Hearing

posted by Anna Gelpern
I am just back from joining 250+ other obsessed (and some paid) persons at the secondSecond Circuit hearing on the pari passu clause in NML v. Argentina. My first reaction on leaving the courtroom was that Argentina was done for, as was Bank of New York-Mellon, and by implication, the Exchange Bondholders. My second reaction (with the benefit of a glazed donut) was that some odd moments in the argument might point to a surprise outcome. My third reaction (with the benefit of coffee) was that my first reaction was right. More than you want to know below.
First, the atmospherics. The hearing took place 2-4:30 pm on Wednesday in the newly renovated courthouse (they just moved back in January), which may explain the confusion surrounding room size, access, overflow, press passes, communications, etc etc. By 10 am, quite a few folks were milling around the elevator bank adjoining the courtroom -- notably Argentine press. Word came down that Argentina's Vice President and Economy Minister would attend the hearing (true). Since all but a few journalists covering the courts had to check their phones at the front door, rumors spread the old-fashioned way, up and down the line, with people plotting to get in, get close, get the best sound, or get some fresh air. An hour before the doors opened, it became clear that not even all the lawyers for the bazillion parties who submitted briefs in the case would get into the 60-seat courtroom, and the two overflow rooms were overflowing.
Inside, the compressed argument schedule became something of a running joke. The judges seemed to encourage lawyers to go on for multiples of their time allotments. What started as a subdued and measured exchange (talking about the formula) got hot-hot-hot by rebuttal-time, with judges shaking their heads, rolling their eyes, and raising their voices, while the masses in the overflow rooms hooted and hollered at their favorite zingers.
Second, the substance. The panel was reviewing Judge Griesa's decision on remandfrom their October 26 ruling. They wanted to know (a) what ratable payment formula should apply in the injunction based on the pari passu clause in Argentina's defaulted bonds, and (b) how the injunction should apply to third parties.
General consensus going into the hearing was that Judge Griesa's formula would not be reopened, if only because it came straight from the contracts: everything owed NML (full principal+past due interest) should be paid alongside everything owed Exchange Bondholders (coupon). Any alternatives would have to be made up. That same consensus held that BNY stood some chance of escaping contempt sanctions for receiving funds from Argentina and distributing them to the bondholders. Wednesday's argument seemed to buck both parts of the consensus--to a point.
FormulaThe judges spent a surprisingly long time probing counsel (mostly Jonathan Blackman for Argentina, but also David Boies for the Exchange Bondholders) for plausible alternatives to the District Court formula. These seemed few. Argentina proposed giving everyone the same proportion of their old unrestructured principal on any given payment date, on the theory that it would approximate bankruptcy treatment.  On the other hand, the court was bothered (and one judge was immensely bothered) by the fact that Argentina's offer came so late in the game, and would not make up for missed paymends over the eleven years of default. When asked, Boies floated a few other formulas that took the eleven-year gap into account. The key point for Argentina, implicitly endorsed by the Second Circuit in remanding the question earlier, is that there must be a difference between "payment obligaitons" (everything due, uncontested) and "ratable payment obligations" (some proportion of everything due, very contested). Even so, I did not get the sense that any of the new formulas was a keeper. The fact that the court took up so much of its time with the question made me think that maybe the judges had come looking for more decision options, but did not get them. Or maybe not.
Third PartiesBNY's argument that it was a passive vessel receiving funds from Argentina for the bondholders, and that notice alone was not enough to support a contempt sanction, seemed to fall flat. The judges said at one point that it would have been "reckless" for lawyers to advise BNY to go forward with a payment even if it were not named in Judge Griesa's order. Weirdly, the judges just do not seem to buy the idea that Trustees represent bondholders, not issuers. At one point, a judge seemed thrilled to find out that Argentina was paying BNY's fees. In her view, this fact alone made BNY into Argentina's (constructive?) agent despite indenture language to the contrary, and hence "in active concert and participation." On the other hand, BNY's lawyers cited oodles of case law saying that the proposed sanction would be inappropriate, while counsel for NML did not counter any of it directly. They again, NML also relied on amicito make this counter-argument in their briefs.
The Exchange Bondholders' argument was essentially all about BNY, with a smattering of the Constitution. David Boies did try to frame the constitutional takings point for Supreme Court review (the court took our contracts for the sake of other people's contracts). There was a related exchange between Boies and the court on whether the old and the new contracts were effectively linked through the pari passu clause, or totally independent (Boies), and whether paying the Exchange Bondholders without also paying NML et al. would amont to granting new debt priority over old debt. 
However, the main objective of David Boies' argument seemed to be to free up the payment chain so the money could flow to his clients, which brought it back to BNY. When Ted Olson for NML conceded that merely receiving money from Argentina would not put the bondholders themselves in contempt, Boies seized on the concession to hammer home the fact that "THEY [BNY] are US." His repeated plea was to spare "us and our trustee". The whole thing was a bit surreal, since everyone seemed to agree that there was no way for Argentina's money to reach the beneficial holders without either BNY or another intermediary, and/or rerouting the payments in violation of the injunction. But if anyone wants to get paid, the eye of the needle is all yours.
From the entire discussion about third parties, it seemed that the Court was in no mood to slice and dice the payment and clearing chain (a worthy subject for a separate post). The thought must be that if BNY is covered, the payment either will not take place, or will take place through others who would be at risk of contempt on the same theory as BNY. The only exempt link in the chain is the beneficial holders of the bonds -- but of course in today's world, there is no way of getting them the money without involving various market intermediaries (trustees, registrars, paying agents, etc.). The technical UCC concept of "intermediary bank" in the payments sense does not seem to map helpfully onto the clearing chain. More another day.
Big Bonus Feature: Sovereign Prerogative. One of the bigger bombshells of the day came from Argentina in the form of the statement that it would default on everyone unless the Court adopted something like its payment formula. The fact that the statement was made with the Vice President and the Economy Minister sitting in the room made it feel like an even bigger deal. Jonathan Blackman's contention was that sovereigns do not and cannot -- and Argentina will not --  "voluntarily obey" foreign judgments against their own domestic law and public policy. Argentina's submission to U.S. jurisdiction was made subject to the understanding that under FSIA, some judgments could go unenforced, and them's the ropes. Since NML was effectively (though not technically) trying to enforce a judgment, it was out of luck. Blackman's hypothetical of an Iranian court order against the U.S. government seemed like a high-risk move under the circumstances. The threat of default prompted Ted Olson for NML to say that Argentina promised this extreme course "to force this Court to back down ... The Court cannot give into that!" True, but methinks the goal was to make it easier for BNY and the Exchange Bondholders to say that the injunction was effectively directed at them (also true). Argentina made the Court very very mad, but it also made Olson sound a little hollow when he argued for upholding the injunction on the assumption that Argentina would comply -- it said it would not. The Court is then stuck with the choice between issuing a feckless injunction, and letting Argentina persist in its "contumacious" ways.
Little Bonus Features. Of all things, the rumor of Elliott's CDS holdings and their seat on the ISDA Determinations Committee came up (did NML stand to benefit from Argentina's default?), as did the idea of the escrow account (wouldn't it be good faith?), and the story about the Exchange Bondholders driving the passage of the Lock Law (innocent bystanders?!). Collective Action Clauses did NOT come up. Yay!
Third, the process. The hearing started with the Court announcing that Argentina's petition for rehearing was denied. This prompted some confusion, since Argentina asked for two rehearings -- panel and en banc -- and some people thought that only the panel rehearing was denied. No one has seen the denial order so far, so who knows. It sounded to me like the whole thing was denied, since Argentina seemed to suggest its only recourse now was the U.S. Supreme Court.
While there will be at least that one more round of appeals, and no doubt more submissions from the parties clarifying some of the points from the argument, there is some chance that the decision will be issued and the stay lifted before near-term payments on the exchange bonds are due. At least so it seems from the fact that one judge asked when those due dates might be (soonest in March). Of course if the Court decides to re-remand for more thinking about the formula, that would take more time -- but it seems awfully unlikely.
Fourth, the atmospherics, again. Boy was the Court mad at Argentina. The judges said clearly that they would not be driven by market reactions, the fate of other defaulted bondholders who would have to line up behind NML for their slice of the pari passu pie, the speculative incentive effects on restructurings, or wishy-washy policy imperatives they did not buy anyway. As they see it, they have a truly atrocious party before them, and they will do whatever it takes to get at it -- Argentina should be treated as the pariah it is. From this perspective, collateral damage does not seem terribly damaging.

HINTERGRUND: Argentinien vs. Hedgefonds - Schuldenstreit vor dem Showdown

HINTERGRUND: Argentinien vs. Hedgefonds - Schuldenstreit vor dem Showdown

Der seit Jahren tobende Rechtsstreit zwischen Argentinien und zwei aggressiven US-Hedgefonds geht in die womöglich letzte Runde. Seit mehr als zehn Jahren weigert sich Buenos Aires, Anleiheschulden bei den Investoren zu bezahlen. Wenn das Anfang des vergangenen Jahrzehnts pleitegegangene Land seiner Linie treu bleibt, könnte dies jedoch sehr teuer werden - denn die Gegenspieler sind mit NML und Aurelius zwei aggressive Finanzspekulanten, die bekannt dafür sind, Pleitestaaten in die Mangel zu nehmen. Am Mittwoch treffen die Parteien vor einem Berufungsgericht in New York aufeinander - vielleicht die letzte Station einer langen Reise durch die Justiz.
Die beiden Hedgefonds NML Capital aus dem Imperium des amerikanischen Milliardärs Paul Singer und Aurelius Capital Partners sind auf das Ausschlachten von ohnehin am Boden liegenden Schuldnern spezialisiert. Genau deshalb hatten sie argentinische Staatsanleihen zu Schleuderpreisen gekauft, bevor das Land Ende 2001 Insolvenz anmeldete. Die Fonds bestehen auf voller Rückzahlung. Beim Eintreiben von Schulden machen sie keine Kompromisse. Argentinisches Staatsvermögen wird mit einem Heer von Anwälten rund um den Globus gejagt. Im letzten Herbst gelang es, ein historisches Segelschulschiff in Ghana beschlagnahmen zu lassen - ein symbolträchtiger Coup.
Zuletzt haben die Hedgefonds zweimal vor Gericht gewonnen - der südamerikanische Staat darf deswegen derzeit keine anderen Schulden bedienen. Dabei hat das Land ohnehin genügend andere Probleme. Argentiniens Regierungschefin Cristina Kirchner kämpft mit einer hohen Inflation und geringem Wachstum. Die Mittelschicht protestiert gegen Korruption, Bürokratie und Misswirtschaft. Und als erstes Land überhaupt wurde Argentinien jüngst vom Internationalen Währungsfonds (IWF) gerügt, weil es seine Daten zur Inflation manipulierte. Und dann sind da noch die Hedgefonds aus New York.
Beim Streit mit den von Regierungsvertretern als "Aasgeier" bezeichneten Fonds wird ein Vorteil aus der Zeit vor der Umschuldung zum großen Nachteil. Dass sich das südamerikanische Land überhaupt vor ein Gericht in New York zerren lassen muss, hängt damit zusammen, dass es sich mit Papieren nach US-Recht für internationale Investoren attraktiv machen wollte. In New York hat Argentinien bisher aber einen schweren Stand. Bezirksrichter Thomas Griesa hat den Klägern schon zwei Mal recht gegeben. Ende Oktober verdonnerte er Argentinien, die strittige Summe von 1,3 Milliarden US-Dollar an die Hedgefonds zu zahlen. Griesa verbot dem Land zudem den Schuldendienst gegenüber seinen anderen Gläubigern, solange die Rechnungen bei Singer und Co. nicht beglichen sind.
Das bringt Argentinien in die Klemme. Denn kurz gesagt bedeutet der Richterspruch: Bezahlt Argentinien seine Schulden bei den Hedgefonds nicht, kann es auch seine restlichen Anleihen in Höhe von 24 Milliarden Dollar nicht bedienen. Es gilt also das Prinzip ganz oder gar nicht, wobei letzteres formal auf einen Zahlungsausfall, also eine technische Staatspleite hinausliefe.
Buenos Aires gelang es zwar, das Urteil bis zum 27. Februar auszusetzen. Zeit, in der neue Argumente präsentiert werden konnten. Das Problem: Es gibt kaum welche. An Geld mangelt es nicht. So beruft sich die Regierung weiter vor allem darauf, dass das Urteil einen Eingriff in die staatliche Immunität darstelle. Wenig überzeugend, heißt es in einer Studie der Kanzlei Shearman & Sterling, denn dieser Einwand sei bereits im Oktober abgelehnt worden. Im Grunde dürfte es ohnehin weniger darum gehen, ob Argentinien seine widerspenstigen Gläubiger bezahlt, sondern wie und wann.
Nach Einschätzung von Analyst Joseph Cotterill, der sich im renommierten Finanzblog "Alphaville" der britischen "Financial Times" mit dem Konflikt befasst, gibt es allerdings eventuell doch noch Strohhalme, an die sich Argentinien klammern könnte. Dabei handelt es sich um die restlichen Anleihegläubiger und die Bank of New York Mellon, die beide an der Seite der Regierung stehen.
Der Grund für diese auf den ersten Blick kuriose Interessenkonstellation: Über die Bank fließen die Zinszahlungen an die übrigen Anleihehalter. Richter Griesa hatte angedroht, das Geld für die Hedgefonds einfach dort zu pfänden, wenn sich Argentinien weiter weigern sollte, sie zu bezahlen. Dass das den eigentlichen Adressaten nicht gefällt, liegt auf der Hand. Doch auch das Geldinstitut wehrt sich und argumentiert, es sei eine neutrale Institution, die nur ihren Job macht.
Sollten die Berufungsrichter diesem Einwand stattgeben, könnten die Gläubiger, die beim Schuldenschnitt bereits auf einen Großteil ihrer Forderungen verzichteten, vielleicht doch noch am langen Arm der Hedgefonds vorbei bedient werden. Laut Cotterill könnte diese ohnehin schon stark geschröpfte Anlegergruppe ein Grund sein, warum die Richter am Ende doch noch von einer harten Entscheidung gegen Argentinien absehen.
Buenos Aires dürfte so oder so stur bleiben, das hat man bereits deutlich gemacht. Zuletzt stellte die Regierung in Aussicht, die alten Anleihen nochmal zur Umschuldung anzubieten. Dem dürften die "Geier"-Fonds aber kaum zustimmen, so nah wie jetzt sind sie ihrem Ziel noch nie gewesen. Argentinien hat zwar schon angekündigt, zur Not vor das oberste US-Gericht, den Surpreme Court, weiterzuziehen.
Experten bezweifeln jedoch, ob eine solche Klage überhaupt zugelassen würde. So könnte bereits heute Abend die entscheidende Anhörung stattfinden - am Mittwoch um 20.00 Uhr (MEZ) startet der Showdown. Die Parteien haben jeweils 15 Minuten Zeit, um die Richter zu überzeugen./hbr/zb/fbr
    --- Von Hannes Breustedt, dpa-AFX ---
AXC0290 2013-02-27/17:35

© 2013 dpa-AFX

Die Zeit: Geierfonds sind oft die Einzigen, die auf Einhaltung der Spielregeln bestehen

HEDGEFONDS-KLAGEFolgen einer Umschuldung
Seite 2/2: 

Geierfonds sind oft die Einzigen, die auf Einhaltung der Spielregeln bestehen

Im Fall von Argentinien sah das so aus: Elliotts Tochter NML kaufte für Hunderte Millionen argentinische Anleihen kurz vor und laut Berichten auch nach der Zahlungsunfähigkeit, zu Cent-Beträgen. Dann verklagte NML Argentinien auf die Rückzahlung zu 100 Prozent. Seither tobt der Kampf zwischen Schuldnerland und Gläubigerfonds. Vergangenen Februarentschied ein Richter in New York überraschend für die Kläger. Die Anleihen enthalten eine gängige Pari-passu-Klausel, nach der Argentinien alle Anleiheinhaber gleich behandeln muss. Der Richter erklärte, Argentinien müsse demnach Altgläubiger, die auf voller Zahlung bestehen, genauso bedienen wie die Anleiheanleger, die die Umschuldung mitgemacht haben. Das hat die argentinische Regierung in eine böse Klemme gebracht: Hält sie an der Weigerung fest, die klagenden Altgläubiger zu bedienen, darf sie auch die umgeschuldeten Papiere nicht bedienen. Damit würde Argentinien zahlungsunfähig. Eine wirtschaftliche Katastrophe. Das Urteil wurde erst einmal ausgesetzt, um Argentinien Zeit zu geben, eine Lösung vorzuschlagen. Gewinnt Elliott, muss das Land rund 1,3 Milliarden Dollar an den Fonds und die anderen Kläger zahlen.
Mit einer ähnlichen Strategie konnte Elliott in Peru kräftig abkassieren. Mitte der neunziger Jahre kauften die New Yorker Schuldscheine zusammengebrochener peruanischer Banken. Nach langen Rechtsstreits zahlte das Land schließlich 58 Millionen Dollar. Elliott soll seinen Einsatz so um 400 Prozent vervielfacht haben.
Für Aktivisten, die für einen Schuldenerlass für arme Länder werben, sind solche Aktionen typisch für bestimmte Fonds. »Geierfonds saugen Mittel ab, die den Ärmsten der Welt helfen sollen«, heißt es in einem Protestaufruf von Jubilee USA, einer Organisation, die die Fonds per Gesetz stoppen will. Als abschreckendes Beispiel verweisen die Aktivisten auf Sambia. Der afrikanische Staat hatte 1979 in Rumänien Traktoren auf Kredit gekauft. Die Schuld blieb offen, bis ein Geierfonds sie 1999 erwarb und nun ein Vielfaches der ursprünglichen Summe eingeklagt hat.
Elliott hat immer wieder betont, sich nur Regierungen vorzunehmen, die eigentlich zahlen könnten, sich jedoch weigerten. Argentinien etwa hätte durch den Rohstoffboom genug in der Staatskasse, um seine rebellischen Gläubiger zu bedienen.
Für Rolf Koch ist Singer ein »genialer Mann«. Der Rentner aus Hessen versucht seit Jahren, Geld für seine Argentinienanleihen einzutreiben. Deutsche Gerichte gaben ihm Recht, eine Pfändung erwies sich jedoch als nahezu unmöglich. Koch hält nichts von der Kritik, die Fonds pressten arme Länder aus. Schließlich handle es sich um verbriefte Versprechen, die die Regierungen gemacht hätten: »Was ist denn mit den gutgläubigen Anlegern, die davon ihre Altersvorsorge bestreiten wollten?«

ob das dem Gericht gefällt ?......“So the answer is you will not obey any order but the one you propose?” U.S. Circuit Judge Reena Raggi asked Blackman during more than two hours of arguments. “We would not voluntarily obey such an order,”

ob das dem Gericht gefällt ?......“So the answer is you will not obey any order but the one you propose?” U.S. Circuit Judge Reena Raggi asked Blackman during more than two hours of arguments. “We would not voluntarily obey such an order,” Blackman said. Hernan Lorenzino, Argentina’s minister of economy, and Vice

Argentina Says It Won’t Voluntarily Comply With Bond Ruling

Argentina’s claim that a U.S. court can’t tie its obligation to make defaulted bondholders whole to payments on restructured debt faced skepticism from judges as a lawyer for the country said it won’t obey orders to pay as much as $1.3 billion of defaulted sovereign debt.
Jonathan Blackman, the attorney for the South American nation, said today that Argentina would default on its restructured debt if it’s forced by a three-judge appeals panel in New York to pay holders of the defaulted debt.
In today’s appeal, lawyers Theodore Olson, right, represents NML Capital, and David Boies, left, will argue for the Exchange Bondholder Group. Photographer: Michael Buckner/Getty Images for American Foundation for Equal Rights
“So the answer is you will not obey any order but the one you propose?” U.S. Circuit Judge Reena Raggi asked Blackman during more than two hours of arguments.
“We would not voluntarily obey such an order,” Blackman said. Hernan Lorenzino, Argentina’s minister of economy, and Vice President Amado Boudou sat at the counsel table as the lawyer addressed the panel.
Blackman claimed that a lower-court order obliging it to pay the defaulted bonds whenever it makes payments on restructured debt violates its sovereignty, threatens to trigger a new financial crisis and would quadruple the number of Argentine bond cases in New York federal court, rather than resolving them.
“If that’s the confrontation the court seeks with the injunctions, that is the court’s decision,” Blackman said. “We’re representing a government and governments will not be told to do things that fundamentally violate their principles,” he said.


A range of third parties with a stake in the outcome -- including the holders of Argentina’s restructured debt, international payment intermediaries and banks, and the trustee for the restructured bonds -- claim the lower court’s actions also threaten their interests.
Holders of defaulted bonds, led by Elliott Management Corp.’s NML Capital Ltd., run by billionaire hedge-fund manager Paul Singer, and Aurelius Capital Management, have won U.S. court judgments recognizing their right to be paid and are asking the appeals court to uphold the lower court to give them the ability to collect the $1.3 billion they say they’re owed.
Argentina says a ruling in the creditors’ favor would open it up to more than $43 billion in additional claims it can’t pay. The country defaulted on a record $95 billion in debt in 2001. Holders of about 91 percent of the bonds agreed to take new exchange bonds in 2005 and 2010, at a deep discount.


The appeals panel heard arguments from both sides, as well as from lawyers for the Exchange Bondholder’s Group, which represents holders of the restructured debt, and for Bank of New York Mellon Corp., the indenture trustee for the restructured bonds. The court may not rule for weeks or months.
Judges expressed doubt about arguments by BNY Mellon that it can’t be subject to U.S. District Judge Thomas Griesa’s order barring third parties from helping Argentina pay the holders of restructured bonds without also paying the defaulted bondholders. Blocking BNY Mellon is key to the defaulted bondholders’ efforts to halt payments on the restructured bonds as a means of forcing payment to them.
“Argentina cannot violate this injunction without participation of the Bank of New York,” Theodore Olson, representing NML Capital, told the judges. Holders of the defaulted debt are seeking “what they are owed,” he said.
The holdout creditors are seeking to uphold rulings by Griesa that require Argentina to pay them the full amount they’re owed whenever it makes a required payment to the holders of the exchange bonds. The Exchange Bondholder Group claims the ruling improperly threatens their investment.


“We’re innocent parties,” attorney David Boies argued for the Exchange Bondholder Group. “I represent people who did what they thought was right. All I’m saying is what they did shouldn’t count against them.”
Griesa’s order shouldn’t apply to restructured debt holders, Boies told the panel. The court can’t hold them hostage, he said.
“If you allow Judge Griesa’s injunction to exist unchanged, everybody in this courtroom knows what’s going to happen,” Boies argued. “Argentina is going to default.”
Boies and Olson also opposed each other in the litigation that decided the 2000 U.S. presidential election -- Olson for Republican George W. Bush and Boies for Democrat Al Gore.


The extra yield that investors demand to hold Argentine debt instead of U.S. Treasuries narrowed 17 basis points, or 0.17 percentage point, to 1,097 basis points at 4:52 p.m. in New York, according to JPMorgan Chase & Co.’s EMBI Global index.
The cost to protect $10 million of Argentine government debt against non-payment over 12 months using credit-default swaps surged 192 basis points to 5,266 basis points, the highest in the world, according to data compiled by Bloomberg.
The yield on Argentina’s New York law bonds due in 2017 that were issued under debt restructurings rose 5 basis points to 15.7 percent, according to data compiled by Bloomberg. The price fell 0.09 cents to 78.99 cents on the dollar.
“I hope that the common sense will be enforced and that means that a bondholder can’t get something different than another one,” Lorenzino said in an interview with Telesur after the hearing.
Argentina won’t violate its own law on debt payments, Boudou said in an interview with C5N.


“It’s a very strong comment to say that they won’t comply with a ruling, a lot stronger than what I expected,” Ezequiel Aguirre, a strategist at Bank of America Corp., said in phone interview from New York. “What matters is what the court of appeals says, and it’s not going to rule today.”
Argentina’s government officials have characterized holders of the defaulted debt as “vultures,” and the country’s legislature in 2005 passed a law barring payment of the defaulted bonds. Argentina has spent the past decade opposing claims brought in U.S. courts by holders of the defaulted bonds.
Many holders of the defaulted Argentina bonds have won U.S. court rulings requiring the country to pay them. Despite the favorable rulings, courts have generally prevented the holders of defaulted debt from moving to seize the country’s assets, citing the Foreign Sovereign Immunities Act, which limits the ability of plaintiffs to sue foreign countries in U.S. courts.
The appeals court has already affirmed Griesa’s ruling that an equal-treatment, or pari passu, clause in the original bond agreements prevents Argentina from treating defaulted bondholders less favorably than exchange bondholders. The appellate court upheld an injunction issued by Griesa that barred Argentina from paying the exchange bondholders without also paying holders of defaulted debt.


Griesa said the order applied to BNY Mellon and other third parties and said Argentina must pay the full $1.3 billion when it makes its next scheduled payment on the restructured bonds.
Olson urged the judges not to let Argentina defy the authority of the courts.
“That is telling this court and all the courts in the United States that the laws of the United States mean nothing,” he said.
The lower court case is NML Capital Ltd. v. Republic of Argentina, 08-06978, U.S. District Court, Southern District of New York (Manhattan). The appeal is NML Capital Ltd. v. Republic of Argentina, 12-00105, U.S. Court of Appeals for the Second Circuit (New York).
To contact the reporters on this story: Bob Van Voris in the U.S. Court of Appeals in New York; Christie Smythe in the U.S. Court of Appeals in New York
To contact the editor responsible for this story: Michael Hytha at

Mittwoch, 27. Februar 2013

The day has arrived. The New York courtroom will be packed to the gunnels – even Argentina’s vice president and economy minister will be on hand as the dramatic “holdout” saga nears its finale. The lawyering will be slick, the arguments sophisticated. So who will win?

The day has arrived. The New York courtroom will be packed to the gunnels – even Argentina’s vice president and economy minister will be on hand as the dramatic “holdout” saga nears its finale. The lawyering will be slick, the arguments sophisticated. So who will win?


The day has arrived. The New York courtroom will be packed to the gunnels – even Argentina’s vice president and economy minister will be on hand as the dramatic “holdout” saga nears its finale. The lawyering will be slick, the arguments sophisticated. So who will win?

First a speedy recap: The Second Circuit Court of Appeals will hear oral arguments in the case at 1400 EDT from four parties: the “holdout” creditors who spurned Argentina’s debt swaps and are suing to collect in full on bonds unpaid since the country’s near $100bn default in 2001 (even though they picked up some of the paper cheaply post-crash); the Argentine Republic, which has made never paying the holdouts an article of faith; the holders of “exchange” bonds issued in debt swaps in 2005 and 2010 during which 92 per cent of the debt in default was restructured; and the Bank of New York Mellon (BNYM) the exchange bonds’ trustee. The latter two feel they have been dragged into a fight in which they have no dog but where they still risk being mauled.

How so? New York Judge Thomas Griesa a year ago ordered Argentina to make a “rateable payment” to holdout creditors led by Elliott, a fund, at the same time as it paid the exchange bond holders. The judge had found Argentina to be in breach of a pari passu or equal treatment clause in the defaulted bonds.

Fine, said the Second Circuit in October – just spell out for us please how this works and who is affected. Judge Griesa did so in November and ordered Argentina to pay $1.3bn into escrow for the holdouts.

Third parties got dragged in beause 1) the exchange bond holders fear Argentina would rather default on payments to them than pay the holdouts and they feel held to ransom; and 2) BNYM feared that the judge’s order that no one should help Argentina dodge the $1.3bn payment in fact prevented it from doing its legitimate duty as trustee – kind of damned if it does, damned if it doesn’t.
Why enjoin third parties in this way? Because Argentina is a serial flouter of default-related judgments. The orders were put on ice pending appeal, staving off fears of a technical default in December if Argentina failed to pay the exchange bond holders in order not to pay the holdouts.

At stake, depending on where you stand, are: creditor rights; the future of sovereign restructurings; New York’s hallowed legal and financial status; and Argentina’s ability to pay not just the $1.3bn demanded in this case but any copycat claims which the government says could amount to $43bn. With central bank reserves of under $42bn, it’s not even a question of won’t pay, it really is can’t pay, runs that argument.
Although everyone glued to this saga has been awaiting Wednesday’s hearing for weeks, the high drama – the actual verdict – may not be delivered for many more weeks or even months. Still, some see the very short periods allocated to the four parties – 20 minutes for the holdouts, 15 for Argentina and just seven each for the exchange bond holders and BNYM – as a sign that the judges’ minds are largely made up.

Oceans of ink have already been written on the issues at stake, the legal wrangling and the possible fallout of the case. So let’s cut to the chase:

1. Has Argentina already lost? On pari passu, the consensus is yes, it has (see the amended pari passu clause in Belize’s restructuring – and note that Belize and Argentina share the same lawyer). Since the Second Circuit is focusing on the issues of ratable payment and third parties, and in October affirmed other aspects of Judge Griesa’s ruling, it looks like a long shot to get the three judges on the Second Circuit panel to look again at pari passu all over again. Argentina’s best hope is its request for the case to be reheard en banc by the full 13-member court. But en banc applications usually fail.

2. If the exchange bond holders are “hostages”, would Argentina shoot? The holders fear it would, because they estimate the central bank only has $19bn available to pay what could be a flood of copy-cat claims. Indeed. EM, another big holdout fund, has already made clear it will follow in Elliott’s footsteps if the holdouts win. The rival view is that if Argentina defaults, it will be because it chooses not to pay the holdouts, not because the court ordered it not to pay the exchange bond holders.

3. Will New York’s standing as a financial hub or bond jurisdiction be helped or harmed and what of future sovereign defaults? The ability to enforce contracts may be seen as a bonus, goes one argument, and the wider impact, some veterans of major sovereign restructurings argue, are limited because the Argentine case is so unique. Opinions are split on this point.

4. Could Argentina try to pay the exchange bond holders elsewhere? Tricky (though some in the market see it as not impossible); proving bond ownership would require help from some third parties, and they would be unlikely to want to risk being in contempt of a ruling not to help Argentina.

4. Will Argentina get away with it? If the teeth of the ruling – the enjoining of third parties not to aid and abet Argentina – is removed, Argentina could lose the battle here but still continue business as usual (the holdouts have plenty of other unpaid judgments, and Argentina has flouted judgments from the World Bank’s arbitration tribunal, ICSID, and remains in default to Paris Club creditors). What would be the risks of continuing to pay the exchange bond holders but not the holdouts in contempt of the ruling? Possibly mostly embarrassment – Argentine officials could be denied entry to the US, for example. But Argentina would remain locked out of international capital markets so Argentine companies would find it harder to raise money, with a knock-on effect on investment and growth. Meanwhile, Argentina’s poor-relation neighbours, Bolvia and Paraguay, can issue debt at under 5 per cent.
Is the case all over bar the shouting? No. Judges and investors may not all have the same concerns, so in the end, the Second Circuit’s decision could hinge on what Vladimir Werning at JP Morgan called in a note to clients “a narrow technical angle riddled with subtle interpretations of the vocabulary” of legal clauses key to this case on funds transfers (UCC 4A) or on injunctions and restraining orders (FRCP 65).
If Elliott loses the battle, can it still win the war? Probably, acknowledge both the exchange bond holders and market participants. After all, a holdout’s ultimate leverage is the ability to block bond issues and holdouts do have a history of ending up getting paid. One day, the thinking goes, Argentina will want or need to tap capital markets.

But let’s not get ahead of ourselves. Are we sitting comfortably? Let the Second Circuit show begin.