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Too Little, Too LateThe Quest to Resolve Sovereign Debt Crises$
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Martin Guzman, José Antonio Ocampo, and Joseph E. Stiglitz

Print publication date: 2016

Print ISBN-13: 9780231179263

Published to Columbia Scholarship Online: January 2017

DOI: 10.7312/columbia/9780231179263.001.0001

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From the Pari Passu Discussion to the “Illegality” of Making Payments

From the Pari Passu Discussion to the “Illegality” of Making Payments

The Case of Argentina1

(p.77) Chapter 4 From the Pari Passu Discussion to the “Illegality” of Making Payments
Too Little, Too Late

Sergio Chodos

Columbia University Press

Chapter 4: goes in depth into the Argentina’s debt restructuring saga after its 2001 default. In his ruling in the country’s dispute with vulture funds, Judge Thomas Griesa of the District of New York decided that Argentina breached a boilerplate pari passu clause included in sovereign bond issuances, and created a novel “equitable remedy” which in effect prohibited Argentina from continuing to service its restructured debt until vulture funds had been paid in advance in full. This decision, which was confirmed by the Court of Appeals of the Second Circuit in October 2012, became operational after the U.S Supreme Court denied in June 2014 a petition for review. The chapter describes the details of the case and argues that the decision constituted a game changer that affected the nature of restructurings to a point where the problems generated by the absence of a fair, effective and efficient mechanism to deal with sovereign debt restructuring can no longer be neglected. Chodos also argues that one of the main consequences of such decision is to render untenable the marked based approach for sovereign debt restructuring.

Keywords:   Argentina's debt restructuring, Pari Passu, Vulture Funds

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