THE LATEST TWIST

The NY Times ran a beaut today on the Argies accusing the trial judge of not understanding what he did.  Now, maybe they are correct but accusing the former chief judge of the Second District of incompetence is not something that one normally sees done even by an organization like the Times who in recent years on matters of what they consider to contain "special import" has adopted a "ready, shoot, aim" standard for their reportage.  Anyway, I promised not to speak any more on the subject until next week but this event is so unusual that I have to break the pledge.

What the Times is claiming is that the good judge overlooked the fact that the restructured bonds are denominated in all kinds of different currencies and covered under the law of a variety of jurisdictions.  In a nutshell, does his ruling cover payment of interest under what we shall call the polyglot bonds or just the bonds governed by New York Law?  No one seems to know at this point and with that, the Argies showed up in New York yesterday and left today.  I mean, what's a weekend without Punta?

I admit that it is an interesting question but unless something has changed since my day, it might well be mute.  Properly drafted, and I must assume that it was, the parri passu clause in  the unrestructured obligations would cover ALL payments by Argentina irrespective of the currency of denomination from the standpoint of New York Law under which the documents were drafted.  Where one gets into the tall weeds is who controls the payments in jurisdictions other than New York such as Argentina for Peso-denominated obligations and it is there that our old friends, Citibank, finds itself piggy-in-the-middle.  Not a good place to be.

Finally, I've had this thing rattling around in my head regarding the supposed payment the Argies made to the trustee of the restructured bonds, the Bank of New York Mellon.  What was giving me a problem was that I couldn't figure out why the hold-outs, who in no way resemble the Little Sisters of the Poor, weren't all over this half-billion just sitting there; after all, they had beaucoup judgements on their side and going after this through attachment would certainly seem to be an option.  So I asked not He Who Knows All Things but a guy like that.

"So, they paid the payment to BNY/Mellon?"

"Yep."

And it just sits there?"

"Yep."

"Why?"

"Ask yourself, 'WHERE does it sit.' "

When it suddenly strikes you that there is a very strong possibility that you can be an idiot at times, it is not a good feeling.  The Argies paid over to BNY/Mellon all right, but at the institution's account at the Argentine Central Bank.  In other words, it never left the country, and there has been a huge dis-information campaign going on to the effect that the Argies have turned over the payment.  Worst yet, the New York Times et Moi missed it.  The Times still has, or maybe they don't care.  But I do.  You heard it here first.

Have a great weekend in Punta or wherever.