Options to explain the IMF "POLICY PAPER" (what a name). You will not like the options

Few weeks away from the ruling from the NY Court of Appeals from the Second Circuit and with the mistery about its content growing up, the IMF is back in the game.

I already referred to the "too little too late" IMF "Policy Paper" in my last post. Now we comment on the timing. Why now? Why not some weeks/months before or after? What about filing an Amicus Brief in January when everybody participated in the case (all kind of bondholders, institutions, academics, politicians, etc.). Anne Krueger participated by her own, not following IMF directions, I am sure. So, again, why now?


One option: the paper was very complicated (it was not I asure you) and time was needed, plus all the bureaucry and internal approvals involved. "And so we just finished it...". We have no idea about the upcoming ruling and since we got paid to prepare policy papers, why not now? Still one option. 

Second option: we dont know anything about the upcoming ruling from the Court of Appeal, and so it is just a coincidence that we launched this paper right before such ruling. The fact that we opine that an eventual negative ruling against Argentina may ruin the existing restructuring debt mechanisms is not intended to press the judges. Hold on, the existing restructuring mechanism does not involve the IMF and our SDRM mechanism, right? Right. Then no, we need another option.

... Third option: we dont know anything about the ruling but... a negative ruling is not bad (in fact it is what we need)... because we want the Anne Krueger, SDRM, or the country bankruptcy supranational courts. So another judicial mess would convince everybody that we are right. And we need to explain it before the ruling, because after it would not be very nice. They would tell that we are late... Let`s speak up now, get our officers and academics ready and if an eventual negative ruling takes plac... then more chances for us. What a stick to the private creditors and sovereign countries that forced us to put the SDRM in the backburner for years and years. Now, it will be out time... It is not that we were waiting it, but.... it is very welcome!

Four option: we dont know anything about the ruling, but since we still want the SDRM but dont want a negative ruling against our good friend Argentina (of course we forgot to file an Amicus brief because the bureaucry times are very slow and the internal paperwork attempted against the speed and short notice that the court gave the friends - only two months), we better say something, just in case it is negative...

Fifth option: we know the ruling, and will be negative, so we want to revert it so that we can help our friend Argentina... Wait... that means that by doing that our SDRM will be dead for another 10 years? Yes. Then, why now? No idea.

Six option: we know the ruling and it will be negative, and there are no chances to overcome it, so it will be a mess. Less re-launch our Krueger SDRM. The rest will be done implicitly but we are ready. Plus the SDRM may be used with Greece, Spain, Italy, Portugal, Ecuador..... So everybody will need us. Let`s go Griesa, and of course these three judges (dont remember the names...). Raggi, Pooler and Parker! Right! The U.S. courts will open the doors for our system and for us...

Seven option: We know the ruling and it will positive. What a pitty... Less still promote our SDRM. Why? It does not make any sense, right? Right. But may be the U.S. Supreme Cour reverts and discipline our lets say it "hated Argentina" and we are the world firemen again.

Other options: your bet.

IMF: "See, we told you - Anne Krueger was rigth"

The IMF is back with suggestions on sovereign debt restructuring. They published a paper on May 23 about the state of the sovereign debt restructuring. And mentions the Argentina judicial case in New York.

They promote debt restructurings, and sooner. "Restructurings have been too little and too late." Probably, the paper is too late to influence the NY panel in the Argentine case. An Amicus Curiae brief should have helped...

The IMF also promotes haircuts: remember the moral hazard. The theory is back. The losses should be borne by the private creditors too because they financed bad governments. Usually the IMF also participated in financing those bad governments. So....

And finally, the IMF is back with its SDRM, or Anne Krueger proposition, which is a bankruptcy systems for sovereign debts. Why? Because the Argentine legal case in NY is showing that the CACs will not be enough to deal with the holdouts. However... the SDRM may also fail, because it is also based on collective action from the creditor on aggregate basis, such as the new CACs. I guess that at least they must show something to help their members. Too little, too late.

Eugenio A Bruno
eab@garridolawfirm.com

The "Sleeping Hammer" and the Delivery Date for the N.Y. Appeal Court?

We expect the "Delivery Date" of the Court of Appeal´s Decision to be around June 27, 2013
Eugenio A Bruno
Garrido Law Firm
Director, TIG Americas

 

The market may believe that the "hammer" is sleeping, but I believe that the three judges are: 

i) discussing internally (inside the pannel) whether or not there is consensus about the decisions (ratable payment and injunctions). In this regard, my take is that want to issue an uniformed decision, without dissents, which could eventually be strong. They want to avoid potential reversals from the U.S. Supreme Court and overall, that their ruling is wrong;

ii) discussing, informally, the issues with debt, financial and legal experts;

iii) discussing the issues with their own legal teams (clerks);

iv) discussing, informally, the case with the U.S. State, Treasury and Justice Departments regarding the "national interest" and other policy implications of the ruling;

v) having some doubts about the effects of the injunctions and may be also about the pari passu clause, but to a lesser extent;

vi) FINALLY, writing the ruling, which must be legally well-grouded, and should be long, with citations about applicable jurisprudence, among other aspects.

All this, of course, takes time. But please dont go to the beach in the U.S. summer time before ruling!

Reuters: Argentina faces very different debt default if loses legal fight

 http://www.reuters.com/article/2013/05/13/us-argentina-debt-idUSBRE94C0AB20130513

 

 

 

 

Discussion of the new Argentine Financial Instruments under the New Money Laundering Program

We will discuss the new program and debt instruments in two seminars of TIG Americas:

May 17 in Montevideo (info.uruguay@theinstituteglobal.com)

May 29 in Buenos Aires (info.argentina@theinstituteglobal.com)

Different judicial outcomes will lead to different policy options and financial outcomes

Different judicial outcomes will lead to different financial outcomes

At the end of the day, a negative and definitive judicial decision may lead to a default. On the contrary,  a better ruling may save the entire situation. Read this paper and send me your comments and questions at eab@garridolawfirm.com
 
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2252210

Judicial Options Listed Vote for yours

Why outcome we will have? Send me your election and explanation to eab@garridolawfirm.com of the options listed in this paper:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2255962

Or other options not listed

Eugenio A Bruno

Upcoming paper on Argentina Debt with questions and answers

I am writing a paper with questions from people that are following the Argentina Debt situation. In case you would like to ask, please send your questions to: eab@garridolawfirm.com

My new book already in Amazon

My new book already in Amazon.com, along my last one:

 "Sovereign Debt and Sovereign Debt Restructuring"
May, 2013

"Global Financial Crisis"
September 2009

Eugenio A Bruno

Leading paper in the Social Science Research Network from the United States

Paper on the strategy of NML listed as top ten in the most consulted scholar international website

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2255962