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Argentina now may face a court order to pay the holdouts in full therefore, before it makes payments on its separate $24 billion in restructured debt. The next regular coupon payment on these bonds is rapidly coming up, too, at the end of June, so we will know soon enough what Argentina will do.
Argentina could try to negotiate a settlement with Singer’s NML Capital, and with Aurelius Capital Management, another holdout distressed debt investor, which so far it has pledged not to do. Instead the country has threatened to default again on all of its debt, all over again, saying it hasn’t enough money to pay both sets of bond holders.
That was disputed by NML Capital, whose lawyers in their brief to the Supreme Court said, “As the lower courts found, Argentina is perfectly capable of paying its debts, if it chooses.”
In its own filing with the Supreme Court, Argentina’s lawyers instead claimed “Compliance will force the country to face a serious and imminent risk of default, with grave ramifications for Argentina, the exchange bondholders, and the capital markets.”
Of course, as a country in very poor economic shape, another massive default is the last thing Argentina needs right now, so it may at the last moment roll over and talk with Singer.
Argentina’s other threat, one even uttered both by its Minister of Finance as well as by its President, has been to say it will default all over again and restructure all of its debt, but this time do it in jurisdictions that are out of the reach of US law. However, it seems this avenue has potentially been blocked as well, with Judge Griesa in October ordering all banks, financial institutions, payments processors or any other entities from desisting from assisting in any such procedures anywhere they may be implemented.
As if all this was not bad enough for Argentina, and its beleaguered President Cristina Fernández de Kirchner, in a parallel legal effort by Singer and his associated distressed debt hedge fund investors, to “discover “ all of Argentina’s overseas assets so that they may be attached if their legal arguments do prevail, the US Supremes this time sided with Singer outright, by a vote of 7 to 1.
Writing for the majority Justice Antonin Scalia, said normal legal rules do allow creditors to seek information on a debtor in order to collect on judgments. If the rules needed to be changed when a foreign state is involved, Congress should be the one to make that determination, he said.
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