Wednesday, October 9, 2013

Will Argentina Ignore Court Orders?

Manhattan Contrarian writes about Argentina's current predicament vis-a-vis prior bond defaults. Argentina defaulted on bonds in 2001, and later in 2005 and 2010, and forced bondholders to take "exchange" bonds with lower face values. Except not everyone did so. The bondholders that refused to take a haircut successfully sued Argentina in U.S. federal court in New York (the bonds provided that they were subject to New York law with venue in New York). After the ruling by the Southern District of New York, Argentina appealed and lost before the Second Circuit Court of Appeals. Now, the U.S. Supreme Court has indicated that it will not hear a further appeal. So, it looks like Argentina has run out of legal options.

Argentina has suggested that it would defy the court orders--and possibly be cut out of U.S. financial markets.

(H/t Instapundit)

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