Comments on: Annals of ignoble cowardice, Second Circuit edition http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Boyardee http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48069 Thu, 12 Sep 2013 19:23:47 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48069 A owes B and C money equally. A decides not to pay B or C unless they take a haircut. C agrees to take a haircut, but B does not. Furthermore, C knows that B will not take a haircut.

If A tries to pay C, but not B: C cannot claim to be an innocent.

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By: cmonneron http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48064 Thu, 12 Sep 2013 09:28:45 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48064 Back in the days where I was a banking trainee, I was taught that the foundation of banking was judicial enforcement. I was also taught to be very careful at not benefiting or helping fraudulent conveyance. Based on what you exposed, this is what Joseph is doing.

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By: nicko123 http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48061 Thu, 12 Sep 2013 02:01:27 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48061 elliot paid 40 millions to buy a defaulted debt in 2008 and now he wants 1400 millions… that is not fair.
Elliot gave money to differents politicians in usa, now they are using that influence they paid.

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48059 Wed, 11 Sep 2013 05:54:28 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48059 * “refuse to pay me” midway through last paragraph

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48058 Wed, 11 Sep 2013 05:50:00 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48058 Felix, I’d like to hear an attorney who works with credit issues weigh in on your perspective. I don’t fit that bill, but I think that many of your points are simply wrong in an individual or corporate context. The complicating factor here is that Argentina is a sovereign, and therefore benefits from certain immunities and can’t be declared bankrupt.

Firstly, look up bankruptcy preference period. At least in a corporate context, the debtor’s payment to Joseph would be voided under U.S. bankruptcy law if it occurred within 90 days prior to the filing of bankruptcy – that’s whether or not any judgment is in place, merely if it advantages Joseph relative to other senior or similarly situated creditors. (That’s subject to certain exemptions such as payments made in the ordinary course of business, which your example doesn’t fit). That period would be a year if Joseph is an insider – e.g, if Joseph is the CEO or a relative of the CEO. So, Joseph would be obligated to pay that money to the debtors’ bankruptcy estate for the benefit of all creditors. It’s a not uncommon occurrence.

Second, referring again to a corporate context, it’s common that subordination agreements are tri-party agreements among the debtor, senior creditor(s), and subordinated creditor(s). A provision of them is that a subordinated creditor receiving payment in violation of the terms of subordination agrees to turn said payment over to the senior creditor(s). Basically, it explicitly spells out Zdneal’s implied contract. This one may be more of a quibble, as I don’t think that all senior / subordinated creditor relationships are structured this way.

Third, a thought experiment. Let’s say, for simplicity, that your net worth is $10 million with no debt. I obtain a $10 million judgement against you for whatever reason – let’s say it’s a personal injury claim for the sake of argument. Your perspective is that you absolutely refuse to me, so you instead – after the judgement – transfer all of your assets to a charity. (A true transfer to a bona fide 3rd-party charity, not trying to shield them with a trust that also supplies you with income or anything of that sort.) Are you really saying that you think that I won’t be able to get those assets, or at least part of them, from the charity? That’s a textbook fraudulent transfer, and I’m pretty damn sure that I’d be able to go after the charity to get the assets that you transferred to them.

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By: y2kurtus http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48057 Wed, 11 Sep 2013 02:24:25 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48057 Thanks for the coverage on this issue Felix. You’re one of a small handful of main streamers paying any attention to this issue so the people who care about it really appreciate you time!

I think you’ve seen enough debt restructurings to know that NOTHING is ever as cut and dry as it should be by statute or contract. I think many people would like to hear more on the big picture sovereignty issue. Do you believe that there are different levels of sovereignty? I would argue that when a country A issues debt in country B that it is not truly Sovereign debt.

Argentina’s position that they can pay junior creditors a pittance while zeroing out the senior creditor holdouts is childishly laughably stupidly arrogant. If creditors begin to get the drift that debtors can get away with that kind of crap then you know the cost of credit moves much higher… and that hurts only the good people and places of the world who pay their bills… deadbeats after all care not what the interest rate is because they ain’t payin it anyway.

I’m 100% with you on one thing though… the world needs a whole lot more equity!

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By: GermanHoldout http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48055 Tue, 10 Sep 2013 16:49:55 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48055 This could (will) be the solution(?):

The U.S. Supreme Court quickly refuses the argentine appeal, and decides for immediate negotiations in order to clear conditions exist, when the “Rights Upon Future Offers (RUFO)” ends (12/31/14).

It could be acceptable for all Holdouts, as also offered by NLM: full capital repayment with a reduction of interest.

In detail: The terms are described in the respective bond conditions.It means, that defaulted bonds, which have become due before 12/31/2014, should be repayed at 100% on 01/01/2015 (end of “RUFO ”). What could be negotiated, is the amount of the outstanding interest. Bonds, which term ends later than 12/31/2014, run normal further (with abbreviated interest that should also have to be negotiated)

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By: GermanHoldout http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48054 Tue, 10 Sep 2013 16:48:28 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48054 The U.S. Supreme Court quickly refuses the argentine appeal, and decides for immediate negotiations in order to clear conditions exist, when the “Rights Upon Future Offers (RUFO)” ends (12/31/14).

It could be acceptable for all Holdouts, as also offered by NLM: full capital repayment with a reduction of interest.

In detail: The terms are described in the respective bond conditions.It means, that defaulted bonds, which have become due before 12/31/2014, should be repayed at 100% on 01/01/2015 (end of “RUFO ”). What could be negotiated, is the amount of the outstanding interest. Bonds, which term ends later than 12/31/2014, run normal further (with abbreviated interest that should also have to be negotiated)

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By: AngryInCali http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48053 Tue, 10 Sep 2013 16:12:09 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48053 The other creditors (i.e. Joseph) are only innocent because they are passive. They are receiving money in violation of their contracts and of judicial decisions, and for them to assume they will get to keep that is naive. For better or worse, lots of passive people get swept up when the government says illegal asset transfers are happening.

And your reasoning as to why the order of seniority has been inverted is opaque. Have other creditors with different bond contracts tried the same tactics without success in the 2nd circuit? My sense is that Elliott is the first to try it with bonds that are enforceable in US courts.

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By: DCLiam http://blogs.reuters.com/felix-salmon/2013/09/10/annals-of-ignoble-cowardice-second-circuit-edition/comment-page-1/#comment-48052 Tue, 10 Sep 2013 15:26:27 +0000 https://blogs.reuters.com/felix-salmon/?p=22466#comment-48052 “Neither Bank of New York nor the exchange bondholders have done anything wrong.”

Right on—it’s not like willful complicity in a scheme to defraud senior creditors by transferring property to third parties could be prosecuted as criminal conspiracy or anything.

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