12 ms·

The point is, they are getting hit multiple times with the "untrustworthy borrower bat" for a single incident in 2001 and are now being forced to screw all of t

The point is, they are getting hit multiple times with the "untrustworthy borrower bat" for a single incident in 2001 and are now being forced to screw all of their borrowers and not just the ones who refused to play ball in 2001. Because NY law. That is like saying "Oh, you can pay none of your debts until you pay the ones you defaulted on already in 2001." Nope.jpg. That is f'ed up. They defaulted in 2001. You don't get to come back and say "Oh, but you have to pay us anyway or we will not let you pay the debts since then either." EDIT: I'm amused by the downvotes given that is how bankruptcy law works most places. You default one time. The zombie borrowers don't get to come back later and demand money later, enforced by the courts.

PeterisP 12y ago
The reason that they can demand money is that those bonds have a requirement that Argentina will pay all bondholders equally - even if they pay x% of it, then they have to pay every bondholder x%, instead of paying some bondholders more and some less or nothing. Now Argentina is paying money to some of those old bondholders according to the restructured debt that Argentina itself agreed to. However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. Argentina can pay noone (as per a default). Argentina can pay all the bondholders equally. But it's not allowed to choose which bonds to pay and which not to pay.
- opendais 12y ago
  > However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. That isn't it. Those "bondholders Argetina dislikes" are asking for more money than the rest and are demanding the full value for bonds that all the other bondholders agreed to take a haircut on in 2001. You don't get to go back and demand full value on debt that was restructured for everyone else. That is like if I declared bankruptcy and one of my credit card companies held out for full payment on the debt when all the others had already signed off on X% of the debt. That credit card company wouldn't be able to do it but these bondholders can because they found the right judge.
  - PeterisP 12y ago
    Argentina issued the bonds on explicit terms that it will be okay to hold out on a haircut - Argentina agreed that even if 93% agree on restructuring, then it's not binding to others and they can demand full value. Argentina issued the bonds on explicit terms that it will pay everyone equally - even if they agree or refuse some future deal. Argentina dislikes them from not agreeing to it, but that's it - only a dislike that doesn't give any rights to pay them differently than others; they didn't have to agree to the haircut, so it's within their rights to demand to be paid whenever the others get paid. For your CC example - yes, it would likely be different in personal bankruptcy, but that's not relevant because personal bankruptcy intentionally gives much more protection than sovereign bonds, the rules are quite different there. And sovereign defaults don't wipe you as clean like a personal bankruptcy does in many western countries - and there are jurisdictions where you don't get personal bankruptcy, and you keep the debts until you die. And in some places, even after that - the debt transfers to the heirs.
    - opendais 12y ago
      I think the issue is, I disagree with the morality of the bondholder's cause and the negative impact it creates on other bondholders. You don't seem to realize that is why I'm complaining. >.>
  - gamblor956 12y ago
    You don't get to go back and demand full value on debt that was restructured for everyone else. That is like if I declared bankruptcy and one of my credit card companies held out for full payment on the debt when all the others had already signed off on X% of the debt. Yes, yes can, especially when the bond says you can. A bond is a legal contract binding the debtor and the creditor. That credit card company wouldn't be able to do it but these bondholders can because they found the right judge. It has nothing to do with the right judge and everything to do with Argentina seriously fucking up on the original bond issuance. One of the terms of the original bond was that minority bondholders could not be forced to accept renegotiated terms *even if the majority of bondholders had accepted new terms. One of the other terms of the original bond was that all bondholders would be paid back equally. It's the combination of the two terms which got Argentina in this mess. You generally don't see either of these terms in bonds, let alone both of them together, for precisely this reason--it restricts the debtor's ability to restructure the debt if things go south.

PeterisP 12y ago

The reason that they can demand money is that those bonds have a requirement that Argentina will pay all bondholders equally - even if they pay x% of it, then they have to pay every bondholder x%, instead of paying some bondholders more and some less or nothing. Now Argentina is paying money to some of those old bondholders according to the restructured debt that Argentina itself agreed to. However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. Argentina can pay noone (as per a default). Argentina can pay all the bondholders equally. But it's not allowed to choose which bonds to pay and which not to pay.

opendais 12y ago
> However, all other bondholders - including some that Argentina dislikes and doesn't want to pay - have a valid claim on that money, according to that initial rule. That's it. That isn't it. Those "bondholders Argetina dislikes" are asking for more money than the rest and are demanding the full value for bonds that all the other bondholders agreed to take a haircut on in 2001. You don't get to go back and demand full value on debt that was restructured for everyone else. That is like if I declared bankruptcy and one of my credit card companies held out for full payment on the debt when all the others had already signed off on X% of the debt. That credit card company wouldn't be able to do it but these bondholders can because they found the right judge.
- PeterisP 12y ago
  Argentina issued the bonds on explicit terms that it will be okay to hold out on a haircut - Argentina agreed that even if 93% agree on restructuring, then it's not binding to others and they can demand full value. Argentina issued the bonds on explicit terms that it will pay everyone equally - even if they agree or refuse some future deal. Argentina dislikes them from not agreeing to it, but that's it - only a dislike that doesn't give any rights to pay them differently than others; they didn't have to agree to the haircut, so it's within their rights to demand to be paid whenever the others get paid. For your CC example - yes, it would likely be different in personal bankruptcy, but that's not relevant because personal bankruptcy intentionally gives much more protection than sovereign bonds, the rules are quite different there. And sovereign defaults don't wipe you as clean like a personal bankruptcy does in many western countries - and there are jurisdictions where you don't get personal bankruptcy, and you keep the debts until you die. And in some places, even after that - the debt transfers to the heirs.
  - opendais 12y ago
    I think the issue is, I disagree with the morality of the bondholder's cause and the negative impact it creates on other bondholders. You don't seem to realize that is why I'm complaining. >.>
- gamblor956 12y ago
  You don't get to go back and demand full value on debt that was restructured for everyone else. That is like if I declared bankruptcy and one of my credit card companies held out for full payment on the debt when all the others had already signed off on X% of the debt. Yes, yes can, especially when the bond says you can. A bond is a legal contract binding the debtor and the creditor. That credit card company wouldn't be able to do it but these bondholders can because they found the right judge. It has nothing to do with the right judge and everything to do with Argentina seriously fucking up on the original bond issuance. One of the terms of the original bond was that minority bondholders could not be forced to accept renegotiated terms *even if the majority of bondholders had accepted new terms. One of the other terms of the original bond was that all bondholders would be paid back equally. It's the combination of the two terms which got Argentina in this mess. You generally don't see either of these terms in bonds, let alone both of them together, for precisely this reason--it restricts the debtor's ability to restructure the debt if things go south.