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http://ssrn.com/abstract=2198686
 
 

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A Vulture's Gamble: High-Stakes Interpretation of Sovereign Debt Contracts in NML Capital, Ltd. v. Republic of Argentina


Theresa Monteleone


Duke University - School of Law

January 9, 2013

Forthcoming, Capital Markets Law Journal (2013)

Abstract:     
The Second Circuit’s decision in NML Capital, Ltd. v. Republic of Argentina may have created a significant problem for any country that faces a need to restructure its outstanding debt, including countries in the Eurozone presently in crisis. By interpreting the pari passu clause of Argentina’s defaulted debt contracts broadly, the court has tipped the balance of power toward creditors in restructuring negotiations, increasing the risk presented by holdout creditors. Thus, a case which involved the interpretation of a somewhat obscure boilerplate term found in most sovereign debt contracts will likely assume central importance in creating future sovereign debt restructuring plans. This paper argues that countries that foresee a need to restructure their debt should act quickly and proactively to ensure that the Second Circuit’s interpretation of Argentina’s pari passu clause will not unduly interfere with their ability to restructure should it become necessary.

Number of Pages in PDF File: 25

Keywords: NML, Argentina, sovereign debt, pari passu, restructuring, vulture fund

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Date posted: January 12, 2013 ; Last revised: January 15, 2013

Suggested Citation

Monteleone, Theresa, A Vulture's Gamble: High-Stakes Interpretation of Sovereign Debt Contracts in NML Capital, Ltd. v. Republic of Argentina (January 9, 2013). Forthcoming, Capital Markets Law Journal (2013). Available at SSRN: http://ssrn.com/abstract=2198686 or http://dx.doi.org/10.2139/ssrn.2198686

Contact Information

Theresa Monteleone (Contact Author)
Duke University - School of Law ( email )
Box 90360
Duke School of Law
Durham, NC 27708
United States
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