Wednesday, June 25, 2014

Argentina Debt - The Framework of the Negotiations

Argentina Debt - The Framework of the Negotiations
Eugenio A Bruno
Partner
Garrido Law Firm

Argentina asked to have fair and balanced negotiations. On Monday the government asked Judge Griesa to grant a new "stay" in order to "protect" the negotiation process. Argentina wants to negotiate under circumstances that (1) allow it to continue paying the bonds restructured under the debt exchanges of 2005 and 2010 (in particular, the payment coming due on June 30, 2014); (2) avoid having the pressure to reach a settlement in a short period of time (less than 40 days); and (3) set forth a legal protective path until the termination of the effectiveness of the RUFO clause (December 31, 2014) in order to avoid potential claims from the exchange bondholders. Argentina considers the holdout debt is not only the claim under the NML case, but it also extends, financially, to a larger amount that would include the potential claims from other holdouts (USD 15b according to the government), and if it is not done properly, it would also extend to potential contingencies from the exchange bondholders under the RUFO.

Yesterday, NML responded Argentina`s petition by arguing that a "new stay" has no legal basis under the applicable laws and rules. NML mentions that if the negotiations advance the parties may still jointly ask the court a new stay in order to complete the negotiations and implement a settlement. NML highlights that the claim should be limited to this particular case.

Judge Griesa must next decide on whether or not the new stay should be given. Under normal circumstances a stay in this stage of the process (firm and definitive rulings) should not have legal basis to be granted. However, given also the particular circumstances of this complicated case it may not be ruled out the possibility that the judge accords to grant the stay, but the chances are more inclined towards the first interpretation.The concers of Argentina are reasonable but it may not be accomodated by the judge.